Category Archives: Santos Basin
The deal marks China’s latest move to win influence over Western-owned energy assets to feed its fast-growing economy. It is also Sinopec’s major purchase in Brazil in just a year after it made a $7 billion purchase from Repsol for a 40 percent stake in its Brazil division.
“For Sinopec, there are not many opportunities to grow in the traditional domestic upstream oil and gas sector — overseas acquisition is an area to find growth,” said UOB Kay Hian analyst Yan Shi.
“It will benefit Sinopec on upstream reserves, and reduce risks in its money-losing downstream operation.”
Sinopec, Asia’s biggest oil refiner, expected the deal will expand its overseas oil and gas business operations and boost its oil and output growth.
Galp’s primary assets in Brazil include four deep-water blocks of BM-S-11, BM-S-24, BM-S-8 and BM-S-21 in the Santos Basin, it said.
Sinopec expected it would receive 21,300 barrels of oil equivalent per day (boedp) in 2015 and production would reach a peak of 112,500 boedp in 2024.
Under the agreement, Sinopec’s wholly owned unit, Sinopec International Exploration and Production Corp (SIPC), will take new shares to be issued by Galp and assume shareholder loans, Sinopec Group said in a statement.
“Taking into consideration this investment and projected future capital expenditure, the total cash payout amounts to approximately $5.18 billion at closing,” Sinopec said.
The transaction must be approved by the Chinese government.
China’s outbound M&A deals this year totaled $37.6 billion, down from $54.1 billion last year, according to Thomson Reuters data.
The deal would help Galp, a newcomer to large-scale oil projects, to finance its stake in the development of massive oil fields in the deepwater region known as the subsalt region in Brazil–site of the largest oil discovery in the Americas in more than 30 years.
“This capital increase significantly strengthens Galp Energia’s capital structure, fully securing its funding needs for the future expansion and development of its upstream activities,” Galp said in a statement.
Sinopec’s overseas acquisition strategy is partly guided by the desire to build up scale in certain countries, including Brazil, said a company official who declined to be named.
Galp is a minority partner with Brazil’s state-run oil company Petrobras in key offshore discoveries, including the vast Lula field, formerly known as Tupi, as well as the Cernambi and Iara finds.
Sinopec Group is the parent of Hong Kong-listed and Shanghai-listed China Petroleum & Chemical Corp. The group does overseas upstream oil and gas investment and operations via its wholly owned unit SIPC.
By Judy Hua, Wan Xu and Ken Wills (Reuters)
- China’s Sinopec buys $5.2-billion stake in Brazil’s Galp (business.financialpost.com)
MODEC announced today that Petróleo Brasileiro S.A. (“Petrobras”), through its subsidiary Tupi B.V., on behalf of Consortium BM-S-11, has signed a Letter of Intent (LoI) for the supply, respectively, charter, and operations of a Floating, Production, Storage, and Offloading (FPSO) vessel for the BM-S-11 block (Cernambi South) in the giant “pre-salt” region of the Santos Basin with its water depth of 2,300m.
The BM-S-11 block is under concession to a consortium formed by Petrobras (65%), BG Group (25%), and Petrogal Brasil S.A – Galp Energia (10%).The LoI was issued to the Schahin Group and MODEC, Inc., who have partnered for the latest leased FPSO. This is the second venture between the Schahin Group and MODEC, Inc.
The Schahin Group and MODEC, Inc. are responsible for the engineering, procurement, construction, mobilization, and operation of the FPSO, including topsides processing equipment as well as hull and marine systems. SOFEC will design and provide the spread mooring.
MODEC will convert the VLCC Sunrise J into the FPSO Cidade de Mangaratiba MV24. The FPSO will be capable of processing 150,000 barrels of oil per day, 280 MM standard cubic feet of gas per day and has storage of 1,600,000 barrels of total fluids. Scheduled for delivery during the 3rd quarter of 2014, the FPSO will be installed in the Cernambi South area.
This is the eighth vessel MODEC will provide and operate in Brazil. MODEC is currently operating the FPSO Fluminense, the FPSO Cidade do Rio de Janeiro MV14, the FSO Cidade de Macae MV15, the FPSO Cidade de Niteroi MV18, the FPSO Cidade de Santos MV20 and the FPSO Cidade de Angra dos Reis MV22. The FPSO Cidade de Sao Paulo MV23 is currently under construction and scheduled to be installed in the fourth quarter of 2012.
“We are very happy to be awarded the third vessel for the pre-salt discoveries. And we are committed to carry out the project by maximizing Brazilian local content in order to contribute to the foundation for the development of heavy industry in Brazil,” said Toshiro Miyazaki, President and CEO of MODEC, Inc.
The Schahin Group has a significant presence in the drilling services market and has been working with Petrobras Group and Consortia of which Petrobras has been participating since 1982. The Schahin Group is pleased to expand in to production services via the partnership with MODEC and Petrobras Group and Consortia in which Petrobras participates.
- Deep water Brazil: To venture where no driller has gone before (mb50.wordpress.com)
- SBM Offshore Signs Contract For FPSO Cidade de Paraty (gcaptain.com)
- Westshore Shipbrokers: Ultra-Deepwater, What is Next for the Shipowner? (Brazil) (mb50.wordpress.com)
(Westshore Shipbrokers AS)- Following in Petrobras’ footsteps, Shell Brasil is about to embark on its > 2,000m water depth portfolio. Drilling will continue into the second quarter of 2012 in the Santos Basin. On the one hand, it’s just another oil major doing something not much different from other operations in the likes of the US Gulf of Mexico. But put into the Brazilian context, it’s much more than that, it’s a milestone for the nation in nearing its offshore exploration and production ambitions, but why is that?
Deep water exploration characterizes the offshore industry in Brazil yet this is actually only the second time an IOC will be involved in an exploratory campaign that breaks the 2,000m water depth threshold, and at quite a distance from shore. Moreover this is being done with a moored semisubmersible and on a pre-salt prospect. The challenges involved with such a combination are huge and require a complex logistical strategy to ensure that when the rig is on location and ready to spud, not the smallest detail is left behind. However we are unlikely to see the last of this type of drilling scenario, Petrobras and other lOCs will follow.
The next piece in the puzzle is shore-based infrastructure, i.e. the demand for better port facilities and plants, berthing facilities which are offshore appropriate and more of them. It all plays into a cycle – the further the offshore operations are from land, the larger the drilling unit required. Bigger drilling units need bigger vessels to support it; in turn they need larger and better equipped ports to support them. The bigger ports need larger fluid and dry bulk plants which need more trucks for transportation and so on. It all boils down to infrastructure and the very pressing need to get it up to the standard needed.,
The larger drilling units in particular need more materials like drilling and completion fluids and this will drive the change in demand for logistics resources – including the demand for offshore support vessels. In addition, the shortage of adequate port infrastructure means these vessels need to provide storage for the materials in addition to their transport function.
This move towards increased capacity per vessel, as opposed to increased number of vessels is somewhat new. Although Brazil has dominated the global UDW scene, it was only about five years ago that Petrobras started searching for PSVs > 3.000 dwt. What we see now is a preference for vessels up to 4.500 dwt – and this will only increase. Moreover, the lOCs are on the same path. That being said, we are not predicting the demise of the smaller PSV in the Brazilian market, far from it. The future for PSVs up to 3.000 dwt seems steady, slightly increased for those around 3.000 dwt but the real growth is in the larger segment of the market – vessels of 4,500 dwt and above.
The future is less easy to predict for the AHTS. Reason being, although the demand is related to the water depth, it also depends on the type of rig – moored or DP. Most operations carried out in water depths of 1.000 to 2,000 meters in Brazil have been done with moored semis – in excess of 80%. The AHTSs in this niche have ranged between 160 tbp to 195 tbp.
For operations in deeper water, larger vessels are needed. Petrobras for one has chartered several vessels in the 21,000 class and Shell Brasil has awarded contracts to two Maersk L class vessels (260 tbp). Therefore, although deeper operations may at first sight be perceived as a predominantly DP-rig market. In Brazil this is not the full story. There is a balance between DP and moored units in the market and the country counts on the presence of a number of mooring specialists working in such water depths. We expect the demand in the AHTS market to remain strong for 160tbp- 195tbp, perhaps increase slightly. And for the >200tbp we expect to see a steep increase, mainly due to the fact that the activity is new and therefore the number of vessels on hire at the moment is low.
Written by Westshore Shipbrokers AS‘ Staff
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- Re-inventing subsea intervention to keep economics above water (mb50.wordpress.com)
- Bay Shipbuilding Begins Construction on Tidewater PSV’s (gcaptain.com)
- New Oil Finds Around the Globe: Will the U.S. Capitalize on Its Oil Resources? (mb50.wordpress.com)
- Brazil Builds $127 Billion “Offshore City” to Harvest Oil in the Deep Sea (treehugger.com)
- USA: Harvey Gulf BOD Approves Construction of LNG-Fueled Offshore Supply Vessels (mb50.wordpress.com)
- India: Cochin Shipyard Names Two Platform Supply Vessels (mb50.wordpress.com)
- GulfMark orders three PSV’s for North Sea market (gcaptain.com)
- Lloyd’s Register unveils new program tailor-made for deepwater drilling (gcaptain.com)
Brazil had another reason to celebrate its May 1 national Labor Day bash. The new reason was the start-up of first oil at the mega Tupi field in the Santos basin. This first extended well test (EWT) of the subsalt formations began producing at a rate of 14,000 b/d of oil and should peak around 30,000 b/d, operator Petrobras says.
Petrobras has not reckoned the size of the BM-S-11 reserves beyond its initial estimates of 5-8 Bbbl of recoverable light oil. The amount, however, was considered staggering enough to inspire President Luiz Inacio Lula da Silva to declare that “God is Brazilian.”
…with a seven-year offshore drilling ban in effect off of both coasts, on Alaska’s continental shelf and in much of the Gulf of Mexico — and a de facto moratorium covering the rest — Obama tells the Brazilians:
“We want to help you with the technology and support to develop these oil reserves safely. And when you’re ready to start selling, we want to be one of your best customers.”
Obama wants to develop Brazilian offshore oil to help the Brazilian economy create jobs for Brazilian workers while Americans are left unemployed in the face of skyrocketing energy prices by an administration that despises fossil fuels as a threat to the environment and wants to increase our dependency on foreign oil.
We have a lot of oil off our shores, too. The politically correct position goes something like this: sure, we’ve got huge reserves. But we have no idea if we have enough to make a difference.
But as the Brazillians have taught us, you don’t know for sure until you drill. Meanwhile:
The EWT is under way on the BW Cidade de São Vicente FPSO, anchored at a depth of 2,120 meters. Output should be around 14 thousand barrels of oil per day.
The information gathered during the Lula Nordeste EWT will help in project development for the finalized production system to be set up in the Lula field under the name Lula Nordeste Pilot, and run on the Cidade de Paraty FPSO.
- Modec Receives FPSO Order from Petrobras, Brazil (mb50.wordpress.com)
- Brazil: Dresser Rand to Equip 8 FPSOs with Compression Equipmen (mb50.wordpress.com)
- Petrobras Announces New Discovery in Carioca Area, Offshore Brazil (mb50.wordpress.com)
- Expro Wins Wireline Contract in Brazil (mb50.wordpress.com)
- Sinopec to Buy Galp’s Offshore Asset in Brazil for USD 3.5 Billion (mb50.wordpress.com)
- Petrobras production hurt by ‘global bottleneck’ for rigs (mb50.wordpress.com)
- Petrobras Discovers Oil at Tucura Well, Campos Basin, Offshore Brazil (mb50.wordpress.com)
- Petrobras Has ‘Many’ Offers for $13.6 Billion of Assets (businessweek.com)
- Brazil: Petrobras Discovers Hydrocarbons in Campos Basin (mb50.wordpress.com)