Page 58: of Maritime Reporter Magazine (November 2013)

58 Maritime Reporter & Engineering News ? NOVEMBER 2013 Oil rights in the rest for Brazil?s post- salt plays will continue to be sold on a concession basis, where oil companies own all the oil, but pay royalties of at least 10% on production. João Carlos França, President of the Brazilian Pe-troleum Institute (IBP) had this to say: ?What surprised me was Exxon not participating. But every company has its strategy. Libra is very large; it de- mands high investments, with high risk and many regulatory uncertainties in the sharing model. It?s not known how the PPSA will perform managing the Þ elds. It?s a great doubt.? The PPSA organization may be viewed with skepticism and considered a risk by some, but the fact is that the company was created speciÞ cally to manage the pre-salt resources efÞ ciently. The risk is still there, yet by choosing a CEO with a technical background instead of a politi-cal appointee, President Dilma Rouseff showed how seriously the PPSA is being taken by the Brazilian government. This is an important indicator that the govern-ment expects the PPSA to keep a tight managerial and supervisory control over the winning consortium to guarantee that the oil costs (the costs related to oil pro-duction) do not skyrocket, which could adversely affect the amount of oil deliv- ered to Brazil and the winning bidders.Local content requirements for equip-ment and services also pose serious concerns to major players. According to executives from major oil companies operating in Brazil, there is a growing fear that local industry will not be able to fulÞ ll demands and meet deadlines, thus slowing down Libra?s development and possibly even delaying Libra?s produc- tion startup, which would also delay any proÞ t gains. By contract, the minimum local content during the exploratory phase is set at 37%. During the EWT, this drops to 15%. For the development phase modules to begin by 2021, local content requirements reach 55%, and for development phase modules beginning in 2022 this increases to 59%. President Dilma Rouseff announced in September, that the development of the Libra pre-salt Þ eld would require between 16-18 new rigs or FPSOs to reach the goal of producing 1 million BOE per day. This goal has since been raised to 1.4 million BOE per day. Between 60-90 support vessels are also forecast to be required. This will be a major boost to the already thriving Brazilian shipbuilding indus-try which has reached a workforce of roughly 70,000, up from an all-time low of only 2,000 workers at the turn of the century. The President of PPSA will be Oswal- do Antunes Pedrosa Jr. He is a 63 year old engineer with a PhD from Stanford. Pedrosa worked for 30 years in Petro-bras, where incidentally, he was chief of current Petrobras President, Graça Foster. After retiring from Petrobras he joined the ANP at its inception in 1998. Since 2010 he has been working with HRT O&G as Executive Director of the Polvo Þ eld, where HRT hold a 60% stake. ?There needs to be a convergence of interests between the PPSA and its partners, including Petrobras as pre-salt operator.? Pedrosa said. ?We also have to supervise the operator in order to guarantee that the main objectives of a company of this nature are reached. The main objective is to maximize the results for both the partners and the state. Now, during our operation, there will always be managerial conditions and procedures, which will allow the PPSA to reach high level agreements with the pre-salt operator, which is Petrobras.? Libra Auction Result With the Þ rst pre-salt auction sched- uled to take place at a hotel located in Barra Beach on the west side of Rio de Janeiro during a commercial holiday on Monday, October 21, the Brazilian government made comprehensive se-curity plans to impede demonstrators from reaching the event venue. Worker and teacher demonstrations have been commonplace in Brazil during the last few years, although they usually end in some form of confrontation with se-curity forces. Before the bidding round started, there were demonstrations by oil workers and others totaling around one hundred people, about 500 meters from Offshore DeepwaterTop Right: Structural Depth of Base; Bottom Right: Salt Libra map.ANP Director Magda Chambriard (left) and Brazilian President Dilma Rouseff (right).(Photo Alberto Stuckert Filho) (Image ANP)(Image ANP)MR #11 (58-65).indd 58MR #11 (58-65).indd 5811/13/2013 11:13:19 AM11/13/2013 11:13:19 AM