The Center for Latin American Issues – George Washington University – Washington, DC – June 6th., 2012

1. Exploiting Brazil’s
Petroleum Reserves
The Center for Latin American Issues – George Washington University – Washington, DC – June 6th., 2012
Claudio A. Pinho
C

2. Energy Consumption 2010-2030 Scenario
Claudio A. Pinho
C

3. Energy Consumption 2010-2030 Scenario
2010* Projections**
* BP Statistical Review of World Energy 2011 ** International Energy Outlook 2011
US Energy Information Administration
Claudio A. Pinho
C

4. Energy Consumption 2010-2030 Scenario
2010*
• Usually wind, solar and
biomass are included in
renewables, but hydro still
the main source of
renewable energy (fact)
• Together fossil fuels
represent 86-88% of world
energy consumption
matrix (fact)
* BP Statistical Review of World Energy 2011
Claudio A. Pinho
C

5. Energy Consumption 2010-2030 Scenario
• Renewables will Projections**
change in 2030 for
20%
• Fossil fuels will
decrease to 64% and
natural gas will have a
share of 42%
• In absolute numbers
the increase of energy
consumption from
2012 to 2030 is
equivalent what US
consumes today ** International Energy Outlook 2011
US Energy Information Administration
Claudio A. Pinho
C

6. Oil & Gas is not only energy
Oil products (refining)
Claudio A. Pinho
C

7. What changed a few years ago?
• Oil sands in Canadá
Claudio A. Pinho
C

8. What changed a few years ago?
• Oil sands in Canadá
• China energy policy
Claudio A. Pinho
C

9. What changed a few years ago?
• Oil sands in Canadá
• China energy policy
• Pre-Salt in West Africa
Claudio A. Pinho
C

10. What changed a few years ago?
• Oil sands in Canadá
• China energy policy
• Pre-Salt in West Africa
• Fracking (or Fracturing technology) in shale Gas
Claudio A. Pinho
C

11. What changed a few years ago?
• Oil sands in Canadá
• China energy policy
• Pre-Salt in West Africa
• Fracking (or Fracturing technology) in shale Gas
• LNG (Liquid Natural Gas)
Claudio A. Pinho
C

12. What changed a few years ago?
• Oil sands in Canadá
• China energy policy
• Pre-Salt in West Africa
• Fracking (or Fracturing technology) in shale Gas
• LNG (Liquid Natural Gas)
• Solar and Wind technologies are improving
Claudio A. Pinho
C

13. What changed a few years ago?
• Oil sands in Canadá
• China energy policy
• Pre-Salt in West Africa
• Fracking (or Fracturing technology) in shale Gas
• LNG (Liquid Natural Gas)
• Solar and Wind technologies are improving
Claudio A. Pinho
C

14. What changed a few years ago?
• Oil sands in Canadá
• China energy policy
• Pre-Salt in West Africa
• Fracking (or Fracturing technology) in shale Gas
• LNG (Liquid Natural Gas)
• Solar and Wind technologies are improving
• US geopolitics axis
Claudio A. Pinho
C

15. Changing US Geopolitics
Claudio A. Pinho
C

16. Changing US Geopolitics
Claudio A. Pinho
C

17. Brazilian Pre-Salt
• 2008 – First pre-salt discoveries
• Brazilian oil reserves estimated to be 14 billion barrels
• Pre-Salt area
reserves
estimated to be
more than 20 6,500
ft.
billion barrels Corcovado
Mountain
 Huge oil & gas fields 10,000
ft
 Located under 16,400 - 22,900 Salt
feet of sea level (approximately
5.000 - 7.000 meters)
 Ultra-deep water drilling (under
6,500 feet or approximately
2,000 meters)
Pre-Salt
 Under a pre-salt layer of 6,000
feet thick (average)
Claudio A. Pinho
C

18. Brazilian Pre-Salt
Pre-salt
area
Tupi
Block
LOGISTICS AND INFRASTRUCTURE
43
Claudio A. Pinho
C

19. 1988 Constitution and its Provisions
The natural resources all belong
to the Federal Government
 the continental shelf
 the exclusive economic zone
 the territorial sea
 the mineral resources including
those of the subsoil
The economic order establishes the principle of free
competition.
Claudio A. Pinho
C

20. Oil&Gas Legal Framework before Pre-Salt
Amendment # 6 (Aug. 1995) Revoked article 171 which
gives the Brazilian Companies some privileges.
Amendment # 9 (Nov. 1995) Changed the article 177 to
break the Petrobras monopoly and allow competition.
Law # 9.478/97 [Brazilian Oil Law] (1997) Created ANP
(National Petroleum Agency) and the rules for bid and
contracting (concession model)
Direct Action of Unconstitutionality (ADIN #
3.273) (2011) Brazilian Supreme Court declares Brazilian
Oil Law constitutional, and declares that oil & gas
exploration can only happen in a competitive marketplace.
Claudio A. Pinho
C

21. Pre-Salt Bills
Federal Government sends 3 bills to
Brazilian Congress to create the Pre-
salt legal framework:
1) Regulatory pre-salt law (changing
the contracts to Production Share
Agreement and defines the
pre-salt area);
2) A bill to create a state company called PPSA (Pré-Sal
Petróleo S/A) to work as the National Oil Company (NOC) in
pre-salt contracts;
3) Capitalization of Petrobras and onerous transfer of rights.
Claudio A. Pinho
C

22. Production Sharing Agreement Model
NOC IOC
COSTS
60% 40%
Claudio A. Pinho
C

23. Pre-Salt Production Sharing Agreement
30% Petrobras 70% Consortium
NOC IOC
COSTS
60% 40%
1st bill => Law # 12.351/10
Claudio A. Pinho
C

24. Pre-Salt Production Sharing Agreement
30% Petrobras 70% Consortium
PPSA IOC
COSTS
60% 40%
2nd bill => Law # 12.276/10
Claudio A. Pinho
C

25. Pre-Salt Production Sharing Agreement
30% Petrobras 70% Consortium
PPSA IOC
e ls
a rr
n B
i llio COSTS
5 B
60% 40%
3rd bill => Law # 12.304/10
Claudio A. Pinho
C

26. Pre-salt Perimeter
• Does the
onerous transfers
of rights is a
regulatory
framework itself?
• Petrobras
answers “yes”
and the industry
and the
Government
accepted that
idea.
Claudio A. Pinho
C

27. What will happen, what will not & challenges
• With the new Director, Magda Chambriard, ANP
(Brazilian National Petroleum Agency) is
returning to its regulatory role
Claudio A. Pinho
C

28. What will happen, what will not & challenges
• With the new Director, Magda Chambriard, ANP
(Brazilian National Petroleum Agency) is
returning to its regulatory role
Claudio A. Pinho
C

29. What will happen, what will not & challenges
• With the new Director, Magda Chambriard, ANP
(Brazilian National Petroleum Agency) is
returning to its regulatory role
• A bill of National Contingency Plan is almost ready to be
filed (PNC Plano National de Contingência) with new
liability standards (probably will be a Presidential Decree)
Claudio A. Pinho
C

30. What will happen, what will not & challenges
Energy Tribune December 1st, 2011
Claudio A. Pinho
C

31. What will happen, what will not & challenges
• With the new Director, Magda Chambriard, ANP
(Brazilian National Petroleum Agency) is
returning to its regulatory role
• A bill of National Contingency Plan is almost ready to be
filed (PNC Plano National de Contingência) with new
liability standards (probably will be a Presidential Decree)
• In 2013 Brazil will bid for new blocks in pre-salt legal
framework offshore and maybe onshore
Claudio A. Pinho
C

32. What will happen, what will8th, 2012
McClatchy – March not & challenges
McClatchy March 8th, 2012
Claudio A. Pinho
C

33. What will happen, what will not & challenges
• With the new Director, Magda Chambriard, ANP
(Brazilian National Petroleum Agency) is
returning to its regulatory role
• A bill of National Contingency Plan is almost ready to be
filed (PNC Plano National de Contingência) with new
liability standards (probably will be a Presidential Decree)
• In 2013 Brazil will bid for new blocks in pre-salt legal
framework offshore and maybe onshore
• Royalties in the new legislation are far
to be solved
Claudio A. Pinho
C

34. What will happen, what will not & challenges
• With the new Director, Magda Chambriard, ANP
(Brazilian National Petroleum Agency) is
returning to its regulatory role
• A bill of National Contingency Plan is almost ready to be
filed (PNC Plano National de Contingência) with new
liability standards (probably will be a Presidential Decree)
• In 2013 Brazil will bid for new blocks in pre-salt legal
framework offshore and maybe onshore
• Royalties in the new legislation are far
to be solved
• There is no policy for independent
producers
Claudio A. Pinho
C

35. What will happen, what will not & challenges
• With the new Director, Magda Chambriard, ANP
(Brazilian National Petroleum Agency) is
returning to its regulatory role
• A bill of National Contingency Plan is almost ready to be
filed (PNC Plano National de Contingência) with new
liability standards (probably will be a Presidential Decree)
• In 2013 Brazil will bid for new blocks in pre-salt legal
framework offshore and maybe onshore
• Royalties in the new legislation are far
to be solved
• There is no policy for independent
producers
• Onshore gas could make the difference
Claudio A. Pinho
C

36. What will happen, what will not & challenges
• Brazilian FTC (CADE) does not really enforce antitrust law
in oil&gas market (Law 12,529/2011 came into force last May 29th)
Claudio A. Pinho
C

37. pre-salt references
Pre-Salt - The new Oil
Regulation in Brazil -
Manhattan Connection
Pre-Salt - Part. 1-3 - Claudio A. Pinho
Claudio A. Pinho
C

38. Thank you!
@ClaudioAPinho
This presentation is posted at
www.slideshare.net/capinho
Claudio A. Pinho
C