Shell Adds New, Deep-water Production In Brazil

(Oil & Gas Technoloy, Mark Venables, 13.Nov.2018) — New, deep-water production is underway at Lula Extreme South in the Brazilian Santos Basin. Royal Dutch Shell plc, through its subsidiary Shell Brasil Petróleo and consortium partners, announces that the FPSO P-69 is now producing.

The FPSO P-69 is a standardized production vessel offshore Brazil with a capacity for 150,000 barrels of oil and 6 million cubic meters of natural gas a day.

Operated by Petrobras, P-69 is a standardized vessel that can process up to 150,000 barrels of oil and 6 million cubic meters of natural gas daily. It will ramp up production through eight producing and seven injection wells.

“The Brazilian pre-salt fields are some of the best deep-water provinces in the world,” said Andy Brown, Upstream Director for Shell. “With significant flow rates, deep-water Brazil projects are breaking even under $40 per barrel. We commend Petrobras on this production milestone, and we look forward to progressing additional development plans with our consortium partners as well as for our recently-acquired, deep-water Brazil blocks.”

Following Lula Extreme South, the next FPSO is P-67 for Lula North. The Libra product sharing agreement continues to progress with an extended well test as well as the Mero 1 FPSO, and additional FPSOs are planned. Shell also has development drilling planned for its operated, Gato do Mato South field in 2019.

Shell has a 25 percent stake in the Lula consortium, operated by Petrobras (65 percent). Galp, through its subsidiary Petrogal Brasil, holds the remaining 10 percent interest.

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Petrobras Reports Oil And Gas Out For Sep. 2018

(Petrobras, 26.Oct.2018) — Petróleo Brasileiro S.A. (Petrobras) announced that in September its total production of oil and gas, including natural gas liquids (NGL), was 2.47 million barrels of oil equivalent per day (boed), 2.35 million boed produced in Brazil and 125 thousand boed abroad.

The total operated production of the company (Petrobras and partners’ share) was 3.18 million boed, with 3.02 million boed in Brazil.

Total oil and gas production remained stable compared to the previous month, with a reduction in the oil production mainly due to the maintenance stoppage of the P-57 platform, located in the Jubarte field, and P-52, located in the Roncador field, both located in the Campos Basin, which was compensated with an increase in gas production mainly due to the production normalization of the Mexilhão platform.

It should be noted that the company achieved the monthly record of utilization of the gas produced of 97.1%.

The tables below detail the production values.

Petrobras maintains its commitment to the production target disclosed in the 2018-2022 Business and Management Plan, considering the ramp-up production of the platforms that have already started operations this year (P-74, in the Búzios field, FPSO Cidade de Campos, in the Tartaruga Verde field and P-69, in Lula field) and the beginning of the production of new systems expected until the end of 2018.

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Guyana: The World’s Next Offshore Oil Hotspot

(Oilprice.com, Tsvetana Paraskova, 23.Oct.2018) — With population of fewer than 750,000 people, Guyana—a neighbor of Venezuela—has always depended on commodities. Sugar, gold, shrimp, timber, bauxite, and rice account for nearly 60 percent of this South American country’s gross domestic product (GDP). Now, Guyana is set to add another valuable commodity to that list.

In 2015, ExxonMobil—whose market capitalization is roughly 100 times Guyana’s GDP—made its first oil discovery offshore Guyana, adding another very precious commodity to the tiny nation’s potential product slate.

Three years and dozens of new oil discoveries later, Guyana is set to produce its own oil for the first time ever, in 2020.

Over the past couple of years, the success rate of discoveries has been phenomenal, analysts say, and some expect that Guyana could be on the road to joining the few non-OPEC nations in the world capable of producing more than 1 million bpd of oil.

Analysts warn that potential development challenges—considering that the area has never produced oil and lacks infrastructure—and the resource curse may spoil the Guyana offshore oil party.

But as things stand now, there are more optimists than pessimists that Venezuela’s small neighbor to the east could become an oil producer capable of plugging part of the conventional oil supply gap next decade. Attractive fiscal terms, scale of resource, and reservoir quality are all there in the Liza complex operated by Exxon, according to Wood Mackenzie analysts, who estimate that the complex has accounted for 15 percent of all conventional crude oil found globally since 2015.

Two months ago, Exxon announced a ninth oil discovery offshore Guyana, which adds to already estimated resource of more than 4 billion oil-equivalent barrels discovered to date.

Exxon expects Liza Phase 1 to start producing oil by early 2020, via a floating production storage and offloading (FPSO) vessel—up to 120,000 bpd.
The Guyana discoveries have the potential for up to five FPSO vessels producing more than 750,000 bpd by 2025, Exxon says.

“Guyana has hit the jackpot,” Maria Cortez, Latin America upstream senior research manager with Wood Mackenzie, said in August, commenting on Exxon’s ninth discovery.

“If this small South American nation with, a population of about 750,000, can properly manage the billions of dollars of revenue about to come its way, it may become the richest corner of the continent.”

In Orinduik Block, another block offshore Guyana, Eco (Atlantic) Oil & Gas, which is partnering with operator Tullow Oil, announced last month that an independent analysis found that there are at least ten exploration leads with close to 3 billion barrels of recoverable oil potential in the Orinduik Block. Tullow Oil and Eco plan to drill their first well in the block in early Q3 2019.
“Guyana is the jewel in the crown, the mother of dragons. That is the hottest exploration area in the world. It’s no longer frontier, it’s a sub-mature basin,” Eco’s chief executive Gil Holzman told S&P Global Platts in an interview this month.

Guyana is a “paradise” for exploring because of the enormous resource of pure, sweet, light oil that is much easier to refine than the heavy crude of its neighbor Venezuela, Holzman said.

The exploration success rate for commercial discoveries in the Stabroek block, where Exxon has been striking more and more oil in recent years, is an “astronomical” 82 percent, compared to global industry average of below 20 percent, according to WoodMac.

The size of reserves and reservoir quality underpin the economics in the block, with project break-even of below US$40 a barrel, the energy consultancy says.

Few oil producing countries pump more than 1 million bpd—there are just ten such producers outside OPEC—the U.S., Canada, Mexico, the UK, Norway, China, Brazil, Oman, Russia, and Kazakhstan.

“New admissions to the group don’t happen very often,” Simon Flowers,Chairman and Chief Analyst at Wood Mackenzie, wrote last month.

“Guyana, with no upstream oil industry four years ago, has a very good chance of joining this elite group,” Flowers noted.

The basin as a whole may hold another 8-10 billion barrels of oil equivalent of reserves, WoodMac has estimated, but warned that extrapolating success rate can be pretty unreliable.

Guyana has the resource potential, the reservoir quality, and the favorable fiscal regime to unlock its oil potential. Rystad Energy estimates that under the current tax regime, the government will have 60 percent of the profit from various projects—more favorable than many other large offshore producers, with the government take for all offshore projects around 75 percent on average.

Rystad Energy expects Guyana’s total oil production to exceed 600,000 bpd by the end of the next decade, generating annual revenue of US$15 billion from the oil and gas industry and some US$10 billion of profit that could be split between the companies and the government.

While oil companies flock to explore promising offshore Guyana waters, the country faces a difficult task going forward—will it escape the resource curse?

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Brazil Reserves And Production Update, H1 2018

(Seeking Alpha, George Kaplan, 19.Oct.2018) — Brazil and Petrobras show something in common with US LTO: even with a lot of debt and desire, and a strong resource base, it is difficult to raise production in the face of high decline rates. It may also be a lesson for the world as oil prices rise and activity picks up; it is by far the most active conventional oil region with many major projects at various stages of completion, but facing delays and schedule crowding so oil production has continued a slow decline, contrary to expectations from last year. In July, new production again did not quite match overall decline, mostly because of delays in start-ups of FPSOs planned for this year, and at 2575 kbpd was down 14 kbpd or 0.5% m-o-m and 48 kbpd or 1.8% y-o-y (data from ANP).

Two FPSOs were started in 2017: Lula Extension Sul (P-66) at 150 kbpd nameplate and Pioneiro de Libra, an extended well test project on the Mero field, at 50 kbpd. Both are now about at design throughput. Two other FPSOs completed ramp-up in 2017. In 2018, three FPSOs have started up: Atlanta a small early production system at 20 kbpd, Bezios-1 (P-74) in the Santos basin at 150 kbpd and FPSO Cidade de Campos dos Goytacazes on the Tartaruga Verde field in Campos, also at 150 kbpd. There were three other FPSOs due for the Buzios field (P-75, 76 and 77) but at least one is delayed till next year. There are now four planned FPSOs remaining to be started up this year, all in the fourth quarter: P-75 and P-76 plus P-67 (Lula Norte) and P-69 (Lula Extremo Sul) in the Lula field (each 150 kbpd nameplate). Even for a company the size of Petrobras that seems a very tight schedule for commissioning large, complex plant, so one or two may slip to next year and all may be so late as to make little difference to this year’s numbers.

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Guyana May be the Next Big Beast in Global Oil

(The National, Robin Mills, 8.Oct.2018) — One of the few major new conventional oil provinces discovered this century could see the country emerge as the top per capita producer.

Who will be the world’s largest oil producing country per person in the 2020s?

Kuwait perhaps, with 3 million barrels per day and a population just over 4 million? Saudi Arabia or, looking further afield, Brunei or Norway? No, that honour will belong to the South American nation of Guyana, which could well be sharing output of 700,000 barrels per day among just 770,000 people.

Although adjacent to Venezuela, Guyana has been better known for sugarcane, and cricketers such as Clive Lloyd, Lance Gibbs and Shivnarine Chanderpaul, than oil. But after first striking oil at Liza in 2015, ExxonMobil and partners Hess and China National Offshore Oil Corporation have made seven major discoveries in deep offshore waters, with production due to start in 2020.

Other companies, including Spain’s Repsol and African-focused explorer Tullow, are also looking. And the trend may extend into the former Dutch colony of Suriname to the east. Beyond Suriname is the overseas French department of French Guiana, where Tullow found oil in 2011 although follow-up exploration has been disappointing.

Guyana is one of the few major new conventional oil provinces discovered this century, along with the Kurdistan region of Iraq (which has subsequently disappointed) and India’s Rajasthan in 2004, Brazil’s “pre-salt” and Uganda in 2006, Ghana in 2007 and perhaps Senegal in 2014. After just four years of exploration drilling, Guyana is already set to be the biggest of these after Brazil. Estimated production costs of $46 per barrel are well below current oil prices, and competitive with shale or other leading deep-water areas.

Unlike the US’ mostly very light shale oil, Guyana’s is a medium-light crude closer to major Middle East grades. Likely to be rich in diesel when refined, it helps fill a hole in the world’s crude diet.

Finding new conventional oil is important for the global industry. Companies such as Shell, Total and Eni have increasingly shifted to gas, which has proved much easier to discover in quantity, while BP and their American peers, ExxonMobil, Chevron and ConocoPhillips, have focused on US shale. Both the International Energy Agency and Opec warn of under-investment and a coming oil crunch, but the major oil reserves in Opec countries and Russia are mostly closed off to international firms by government policy, insecurity and sanctions.

If the discoveries are significant for the world, they will be transformational for Guyana. Gross oil revenues of some $13 billion annually by the mid-2020s, or about $17,000 per inhabitant, contrast to its 2016 GDP of just $3.4bn. Only some 14 per cent of this will come to the government for the first two to three years while costs are paid off, but this is still an enormous bonanza.

But, like other new oil states, Guyana has to manage the perils of a sudden influx of wealth. It has good advice, as a member of the New Producers Group, an initiative of UK think tank Chatham House, the Natural Resource Governance Institute, and the Commonwealth, which brings together experts, politicians, government and civil society from a number of newly-established oil- and gas-producing countries.

These problems are well known but not so easy to solve. Government faces the risks of corruption, nepotism and patronage; a weakening of democracy; over-spending and vulnerability to falls in oil prices; and a lack of capability to manage oil operations and tax collection. The economy is threatened by conflicts over fiscal terms with the oil companies; the temptation to introduce wasteful energy subsidies; inflation and currency over-appreciation; and a loss of competitiveness from the non-oil sector. And the local population confronts unrealistic expectations of sudden wealth; an influx of outsiders; and environmental damage.

These issues are particularly salient for Guyana, a relatively small and poor country with quite high levels of corruption. It also neighbours troubled Venezuela, which has claimed two-thirds of its territory. Some Guyanese worry that the valuable work of oil services and contracting, a way to develop the domestic economy and skills, will be mostly supplied by next-door Trinidad and Tobago, which has a long-standing petroleum industry. The large gas resources found along with the oil also have to be used responsibly.

Much has been learned about potential solutions over the past two decades, though they come with their own conundrums. A sovereign wealth fund, like the Abu Dhabi Investment Authority or Norway’s oil fund, avoids a too-sudden influx of money; stabilises the government budget against oil price volatility; and saves for future generations. A robust political process and rules are needed to ensure the fund is not raided or diverted for pet projects.

A national oil company (NOC) helps build skills and strengthen the management of the sector. But it should not become a vehicle for handing out jobs to cronies or politicised meddling in the industry. Experienced lawyers, accountants, geologists and others are needed to staff a NOC and a petroleum regulator, and cannot be spread too thinly.

It is essential to educate the government machinery, media and civil society, so they understand how much money is coming in, and have a voice in how it is used. Bodies such as the Extractive Industries Transparency Initiative (EITI) report on oil revenues and their allocation.

Guyanese are fortunate to have contrasting examples next door in Venezuela of how a mismanaged oil sector can ruin a country; and Trinidad, where petroleum has generally been positive for the country.

International help and goodwill will hopefully ensure their oil is a bonus not just for the world economy but for the people.

Robin M. Mills is CEO of Qamar Energy, and author of The Myth of the Oil Crisis

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Aker Solutions Wins Subsea Order for Libra’s Mero Field Offshore Brazil

(Aker Solutions, 5.Oct.2018) — Aker Solutions has signed a contract with Petrobras to provide a subsea production system and related services for the Mero 1 project within the Mero field development, one of the largest oil discoveries in Brazil’s pre-salt area.

The subsea production system will consist of 12 vertical subsea trees designed for Brazil’s pre-salt, four subsea distribution units, three topside master control stations for the Mero 1 Guanabara FPSO and spare parts. The order also includes installation and commissioning support services.

“We’re pleased to become a key supplier to Petrobras and its partners for the first full production project of this major development,” said Luis Araujo, chief executive officer of Aker Solutions. “We have an extensive local workforce and over 40 years’ experience in Brazil and look forward to continuing to play an important role in the development of the country’s pre-salt resources,” he added.

Aker Solutions’ subsea manufacturing facility in São José dos Pinhais and its subsea services base in Rio das Ostras will carry out the work.

The work has already started and deliveries are scheduled for 2020. Installations are scheduled between 2020 and 2023.

The subsea production system will be hooked up to the first full-scale floating production, storage and offloading (FPSO) vessel for Mero, known as the Guanabara FPSO. The FPSO is scheduled to come on stream in 2021 and will have capacity to process up to 180,000 barrels of oil a day and 12 million cubic meters of gas a day.

The ultra-deepwater Mero field is located in the northwestern area of the original Libra block, which is about 180 kilometers south of Rio de Janeiro. First oil was produced in November last year.

Petrobras is the operator of the consortium developing the Libra area. Shell, Total, CNPC and CNOOC Limited are partners. Pre-Sal Petróleo S.A (PPSA) manages the Production Sharing Contract.

The companies are not disclosing the value of the contract. The order will be booked in the third quarter of 2018.

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Output from Main Pre-Salt Field to Peak in 2019

(Efe, 6.Sep.2018) — Output from Brazil’s most prolific pre-salt field will climb to a peak of 1 million barrels of oil per day in 2019, according to the executive manager for deep-water exploration and production at state oil company Petrobras.

The Lula field, located in the Santos Basin, will achieve that level after two Floating Production Storage and Offloading (FPSO) units are put into operation this year, Joelson Falcao Mendes said.

“The P69 will start production in October and the P67, which is currently in Guanabara Bay (in southeast Brazil), in December or January,” he added.

Seven FPSO units are currently in operation at the Lula field, each with the daily capacity to process 150,000 barrels of oil and compress 6 million cubic meters (211.5 million cubic feet) of natural gas.

Brazil achieved output of 1.5 million barrels of pre-salt oil per day in 2018, a milestone that comes 10 years after the start of hydrocarbon production in that ultra-deep frontier.

At present, average production at the Lula field amounts to around 850,000 barrels of oil per day.

Petrobras says output at the pre-salt fields is expected to grow steadily through 2022 with the entry into operation of an additional 13 FPSO units and investment outlays totaling $35 billion.

Pre-salt fields are located in ultra-deep water some 300 kilometers off the coast and underneath a layer of salt up to 2 kilometers (1.2 miles) thick.

The Lula field is located in the BM-S-11 block, in which Petrobras has a 65 percent stake and the BG Group and Portugal’s Galp Energia have 25 percent and 10 percent stakes, respectively.

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Guyana Leader Cringes with Each Oil Discovery

(Kaieteur News, Abena Rockcliffe-Campbell, 31.Aug.2018) — Ordinary Guyanese who do not fully understand the fiscal regime of Guyana’s deal with oil giant, ExxonMobil might get excited each time a new discovery is made. On the other hand, Opposition Leader Bharrat Jagdeo indicates that he cringes.

Yesterday, ExxonMobil announced another find offshore Guyana. The discovery of approximately 197 feet (60 metres) of high-quality, oil-bearing sandstone reservoir at the Hammerhead-1 is the ninth discovery of oil in the Stabroek Block offshore Guyana and the fifth within the last year.
There was a bit of silence from Jagdeo yesterday while speaking about the find. When he began speaking again, he said, “It drifts me off when I think about how much we are losing. It trips me a bit.”

Even though ExxonMobil is already at its ninth discovery, the company is far from exploring most of the Stabroek, which it has control of.
Jagdeo said that it is rather unfortunate that all these discoveries being made are falling under that same contract that most right thinking people have concluded is stacked in the interest of ExxonMobil.

“This ninth discovery will be processed through the same old contract…The thing is that the President has no clear position. When I told him of my concerns, he said that they are strengthening and so moving forward. No specific answers to my questions. I hope you have better luck.”
Jagdeo continued, “I did not get any clear answer but he said that they have just hired somebody to strengthen the department.”

Further, Jagdeo said that during his meeting with the President yesterday, “I raised the issue about the confusion that the government itself said no future contract would be negotiated on the same terms as ExxonMobil. But they are yet to define to the country what the new terms will be.”

Jagdeo told the media that the Opposition is very concerned that while the government declared that it will ensure better terms, “they are proceeding to give the exact same terms that ExxonMobil got through side approaches. You recall our position in the (National Assembly) when that proposal was made to give Mid-Atlantic some similar concessions.”

Jagdeo recalled that the PPP’s position was to defer the handing out of the concession until the framework for future negotiations was arrived at.
Jagdeo said he “asked the President directly, ‘are you going to be tendering future blocks’ but the President did not give any straight answer.

“He agrees that we now have more people who want blocks than we have available. This is the reverse of what we had in the past. I said to him, the only way we can avoid middle men creaming the benefits is to go to tender – auction, so the money will accrue directly to the people, the taxpayers.”
But, according to Jagdeo, the President still could not give perspective on the way forward.

The Guyana reserve is one of ExxonMobil’s biggest assets worldwide.
Discoveries of approximately four billion oil-equivalent barrels were made on the Stabroek Block prior to yesterday’s announcement. Discoveries were made at Liza, Liza Deep, Payara, Snoek, Turbot, Ranger, Pacora and Longtail with the potential for up to five floating production, storage and offloading (FPSO) vessels producing more than 750,000 barrels per day by 2025. Prior to Hammerhead-1, which is located approximately 13 miles (21 kilometres) southwest of the Liza-1.

A second exploration vessel, the Noble Tom Madden, is due to arrive in Guyana in October to accelerate exploration of high potential opportunities and will commence drilling at the Pluma prospect, approximately 17 miles (27 kilometres) from Turbot.

The Stabroek Block is 6.6 million acres (26,800 square kilometres). ExxonMobil affiliate, Esso Exploration and Production Guyana Limited, is the operator and holds 45 percent interest in the Stabroek Block.

Hess Guyana Exploration Limited holds 30 percent interest and CNOOC Nexen Petroleum Guyana Limited holds 25 percent interest.

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ExxonMobil Adds Ninth Discovery Offshore Guyana

(ExxonMobil, 30.Aug.2018) — Irving, Texas-based ExxonMobil has made its ninth discovery offshore Guyana at the Hammerhead-1 well, marking its fifth discovery on the Stabroek Block in the past year and proving a new play concept for potential development.

Hammerhead-1 encountered approximately 197 feet (60 meters) of high-quality, oil-bearing sandstone reservoir. The well was safely drilled to 13,862 feet (4,225 meters) depth in 3,773 feet (1,150 meters) of water. The Stena Carron drillship began drilling on July 27, 2018.

“The Hammerhead-1 discovery reinforces the potential of the Guyana basin, where ExxonMobil is already maximizing value for all stakeholders through rapid phased developments and accelerated exploration plans,” said Steve Greenlee, president of ExxonMobil Exploration Company. “Development options for Hammerhead will take into account ongoing evaluation of reservoir data, including a well test.”

Hammerhead-1 is located approximately 13 miles (21 kilometers) southwest of the Liza-1 well and follows previous discoveries on the Stabroek Block at Liza, Liza Deep, Payara, Snoek, Turbot, Ranger, Pacora and Longtail. Those previous discoveries led to the announcement of an estimated recoverable resource of more than 4 billion oil-equivalent barrels discovered to date, and the potential for up to five floating production, storage and offloading (FPSO) vessels producing more than 750,000 barrels per day by 2025.

There is potential for additional production from significant undrilled targets and plans for rapid exploration and appraisal drilling. A second exploration vessel, the Noble Tom Madden, is due to arrive in Guyana in October to accelerate exploration of high potential opportunities and will commence drilling at the Pluma prospect approximately 17 miles (27 kilometers) from Turbot.

Liza Phase 1, which is expected to begin producing oil by early 2020, will use the Liza Destiny FPSO vessel to produce up to 120,000 barrels of oil per day. Construction of the FPSO and subsea equipment is well advanced. Pending government and regulatory approvals, Phase 2 is targeted for sanctioning by the end of this year. It will use a second FPSO designed to produce up to 220,000 barrels per day and is expected to be producing in 2022. A third development, Payara, will target sanctioning in 2019 and use an FPSO designed to produce approximately 180,000 barrels of oil per day as early as 2023.

The Stabroek Block is 6.6 million acres (26,800 square kilometers). ExxonMobil affiliate, Esso Exploration and Production Guyana Limited, is operator and holds 45 percent interest in the Stabroek Block. Hess Guyana Exploration Ltd. holds 30 percent interest and CNOOC Nexen Petroleum Guyana Limited holds 25 percent interest.

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Guyana Must Investigate ExxonMobil’s Waste Disposal Plan

(Kaieteur News, 29.Aug.2018) — The Open Society Institute (OSI) is appealing to Government to keep a watchful eye on how ExxonMobil plans to dispose of potentially hazardous waste while operating here.

The OSI is an international body that aims to shape public policy to promote democratic governance, human rights, and economic, legal, and social reform.

According to OSI, the environmental consequences of oil are substantial throughout the entire process of development. The Institute said that each stage of the process—exploration, onshore and offshore drilling, refining, pipelines and other forms of transportation—poses serious risks to the ecology and public health.

It said that every environmental medium—air, water, and land—is affected. The Institute said that the degree of environmental harm is determined by operator responsibility, government oversight, and conditions in particular ecosystems. Even in heavily regulated environments, some damage occurs it said.

Further to this, the Institute explained that the disposal of oil wastes from offshore drilling operations is another significant environmental concern. In this regard, the Institute said that an oil platform uses nearly 400,000 gallons of sea water daily as drilling fluids in the extraction process, and, following its use, this oil-tainted water is discharged back into the ocean.
The Institute said, “One of the apparent impacts of offshore discharges has been mercury pollution; eating contaminated fish is increasingly regarded as a substantial cause of human exposure to mercury.

A study found that mercury levels in the mud and sediments beneath oil platforms in the Gulf of Mexico were 12 times higher than acceptable levels under U.S. Environmental Protection Agency standards.”

The OSI said that the only way to solve the problems caused by offshore discharges is to capture the wastes and dispose of them in a properly lined waste disposal site on land. It said that Guyana’s Environmental Protection Agency needs to keep a close eye on this area.

(SEE LINK FOR FURTHER DETAILS)

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Petrobras Posts 1H:18 Profit, Reduces Debt

(Petrobras, 3.Aug.2018) – Petrobras reported net income of R$ 17 billion in the first half of 2018. The positive result was mainly influenced by the increase in international oil prices, associated with the depreciation of the  Brazilian Real against the US dollar. In the same period, net debt fell 13% compared to December 2017, to US$ 73.66 billion.

Operating income and cash inflows of US$ 5 billion from divestments in the first half were the main factors for reducing net debt, which totaled 3.23 times earnings before interest, taxes, depreciation and amortization (adjusted Ebitda), compared to 3.67 at the end of 2017. Without the provision for the Class Action agreement, the indicator would have been 2.86. As a result, Petrobras remains committed to reaching the goal of 2.5 by the end of this year. The indicator for the top metric, the Total Recordable Injuries (TRI) was 1.06 per million man-hours at the end of June. Petrobras remains committed to the already announced metric of 1.0.

With the reduction and liability management, Petrobras reduced its financial expenses (most interest) by R$ 1.6 billion in the first half and extended its debt, without having to pay a higher price. The average term maturity increased from 8.62 to 9.11 years and the average interest rate remained around 6%.

The performance of the company’s operations maintained a positive trend, which had already been recorded in previous quarters, with an operating income 18% higher than the first half of 2017, totaling R$ 34.5 billion, with lower general and administrative expenses and lower equipment idleness expenses. Total oil and gas production was 2.7 million barrels of oil equivalent per day (boed) in the first half, in line with the target set for 2018.

The operational highlights included the start-up of the first production system in Transfer of Rights area, the P-74, in the Búzios field, and a new production system in the Campos Basin, with the FPSO Cidade Campos dos Goytacazes, in Tartaruga Verde field. Another highlight was the arrival of the P-67 to Brazil, which will be the eighth platform to operate in the Lula / Cernambi fields. Since 2017, Petrobras has increased its exploration area by 31%, with acquisitions in the bidding rounds of the National Petroleum, Natural Gas and Biofuels Agency (ANP), prioritizing those with greater potential in the Campos and Santos Basins.

There was also a reduction in sales volume in Brazil (mainly gasoline, due to increased ethanol competition) and a drop in the volume of exported oil. Petrobras’ share of the diesel market increased from 74% in 2017 to 87% in June 2018. In gasoline, the increase was 83% in 2017 to 85% in June 2018.

Positive results lead to the collection of R$ 75.2 billion in taxes and government participation

In the first half of 2018, Petrobras generated R$ 75.2 billion in taxes and government participation, including royalties in Brazil, for the three federative levels: the Union, states and municipalities. The rise in international oil prices from US$ 51.81 in the first half of 2017 to US$ 70.55 this year was the main factor contributing to this increase of 28% over the first half of 2017.

Remuneration to shareholders

Petrobras will anticipate payment to shareholders in the form of interest on capital (JCP) in the amount of R$ 0.05 / share for both classes of shares. The payment, in the total amount of R$ 652.2 million, will occur on 08/23/2018. The accumulated amount of prepayments in the first half is R$ 1.3 billion.

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Shell Brazil Invests in FPSO Tanks Solution

(World Oil, 31.Jul.2018) – Aberdeen-based inspection technology and service provider for the oil and gas industry, Innospection, Shell Brazil and SENAI CIMATEC technology institute in Salvador, Brazil, have recently signed a partnership agreement to develop a robot-based technology for in-service inspection of cargo oil tanks of FPSOs.

This robot system called MCCR (MEC Combi Crawler Robot) will be deployed externally to the hull of Shell-operated and non-operated FPSOs worldwide. The robot will be able to clean marine fouling on ship hull, detect defect size and depth, among other features. This will allow for a potential increase in tank inspection efficiency, thus improving integrity and increasing safety for FPSOs. This solution is expected to allow for cost savings of 20% to 30% in tank inspections, when used in combination with other robotic inspection tools like aerial drones.

Shell Brasil Technology Manager Jose Ferrari said: “We are very excited with this promising partnership, which will lead to an optimized inspection process for our FPSOs, further contributing to streamlining the structural integrity management of our assets. We also look forward to having two important partners, Innospection and SENAI CIMATEC, who have previously worked for Shell in Brazil and abroad.”

Innospection, CEO, Andreas Boenisch said: “In several aspects this project has already achieved great milestones, from R&D collaboration between an Operator an Institute and a commercial technology company, to the high end robotic integration of various inspection technologies and surface cleaning into an almost autonomous subsea operating system, to a major cost saving aspect ofthe asset deployment and operation. We are excited to work with a great team on a great industry solution.”

SENAI CIMATEC Technology and Innovation Manager Daniel Motta adds that the project consolidates a partnership with Shell, started with the development of autonomous underwater vehicle (AUV) FlatFish. “We will be developing one more highly relevant project with Shell to boost its oil and gas exploration to even higher levels. It is a project that strengthens Brazil’s technology capabilities, thanks to a combination of resources from the Brazilian Oil and Gas Agency (ANP), Embrapii and our international partner Innospection.”

The project will cost approximately $9 million, from which $4.5 million will be funded by Shell Brasil through the ANP research levy on oil and gas revenues.

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Guyana: Will its Oil Boom Benefit the People?

(Al Jazeera English, 30.Jul.2018) – Oil companies have identified massive offshore reserves in Guyana, one of South America’s poorest nations. New estimates last week report that more than 4 billion barrels of oil could be extracted from a region known as the Stabroek block, where ExxonMobil expects to start pumping crude from in 2020. The country is poised to become a major energy supplier, but not everyone is optimistic about the potential for oil revenue to benefit Guyanese citizens. So what can Guyana do to avoid becoming another poor, yet resource-rich nation?

On this episode of The Stream, we speak with:

— Christopher Ram

Lawyer and newspaper columnist

chrisram.net

— Jan Mangal

Former petroleum advisor, President David A. Granger

linkedin.com

— Lisa Sachs @CCSI_Columbia

Director, Columbia Center on Sustainable Investment

ccsi.columbia.edu

— Imran Khan @imrankhangy

Press Secretary, Prime Minister Moses Nagamootoo

dpi.gov.gy

***

Review Guyana Oil Spill Plans Before Signing Contracts

(Kaieteur News, 30.Jul.2018) — Before any contract is signed with an oil operator, the government should require that it presents and obtains approval for contingency plans in the case of emergency.
According to the Natural Resource Governance Institute (NRGI), these contingencies should include the availability of equipment and expertise to manage accidents, such as oil spills. The Institute said that this should be accompanied by the means to monitor a project throughout its life cycle to ensure that all parties follow the plan and to identify future, unexpected impacts of the project.

As it is impossible to predict all the potential costs, NRGI said that requiring developers to have systems in place to monitor and manage environmental and social impacts on an ongoing basis is just as important as the assessments conducted in project planning.

The Institute opined that the government is responsible for setting and enforcing environmental standards (preferably in compliance with international standards such as the Equator Principles), while the extractive company is usually in the best position to mitigate environmental damage. The international organization said that companies may have only weak incentives to consider the environmental consequences of operations, unless the government makes it a condition of awarding the concession, with penalties attached. As such, NRGI said that the government should ensure that either it or the company sets aside funds for remediation, as the company may leave or sell to another party when projects become unprofitable, which may be long before the official project period ends. It said, too, that independent contractors, acquired on a competitive basis, can be hired to undertake environmental operations such as reclamation.
Further to this, NRGI said, “The security arrangements around projects can give rise to human rights concerns when private or state security forces use excessive force. Operations should include strong safeguards and legal recourse mechanisms in cases of human rights violations.”

NRGI said, “Finally, the government should separately and explicitly identify and factor into the decision-making process the social impact of extraction on vulnerable or marginalized groups of resource extraction since these groups are often omitted from broader community impact consideration.”

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Pemex to Carry Out Maintenance On El Señor del Mar

(Pemex, 26.Jul.2018) – The works will not affect the production goals established by Pemex for the current year

Starting this Saturday, July 28th and until the 4th of August, Petróleos Mexicanos, through Pemex Exploración y Producción (Pemex Exploration and Production), will perform scheduled maintenance work on the tanker vessel Yúum K’ak’náab, better known as El Señor del Mar (The Lord of the Sea), which is anchored in the Campeche Sound.

Work on El Señor del Mar will be performed according to the safety and environmental protection protocols that govern the State-Owned Productive Company. Due to its technical characteristics, maintenance is performed on this vessel every year, specifically for its safety and processing systems, which guarantees its continued operation and reliability, and also ensures keeping all certifications current, which meet the highest quality and safety standards.

This scheduled shutdown will reduce daily production by approximately 95,000 barrels of crude oil and 28 million cubic feet of gas in the Ku-Maloob-Zaap field. However, this temporary reduction has been taken into consideration from the beginning and will therefore not have a damaging effect on the annual production goal established by Petróleos Mexicanos.

The FPSO (Floating Production Storage and Offloading), as this kind of oil production vessel is known, are enormous ships used for the production, storage, and discharge of hydrocarbons, where the crude oil and the gas from production wells are separated. El Señor del Mar is currently operating in the Ku-Maloob-Zaap Field, as it has since mid- 2007.

The storage capacity of El Señor del Mar could fill the Plaza Mexico (Mexico’s Bull-fighting Ring) four times, and its length is comparable to four football fields. The hull of the vessel is twenty-five feet higher than the Pyramid of Kukulcán in Chichén Itzá, and has an electricity production plant that produces 48 MW, which is enough energy to power 40,000 homes.

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ExxonMobil Raises Stabroek Block to More Than 4 Bln Bbls

(ExxonMobil, 23.Jul.2018 ) – ExxonMobil has increased its estimate of the discovered recoverable resources for the Stabroek Block offshore Guyana to more than 4 billion oil-equivalent barrels and has advanced its evaluation to support a third phase of development and consideration of two additional phases.

The increase follows completion of testing at the Liza-5 appraisal well, a discovery at Ranger, incorporation of the eighth discovery, Longtail, into the Turbot area evaluation and completion of the Pacora discovery evaluation. The previous recoverable resource estimate was 3.2 billion oil-equivalent barrels.

“Outstanding resource quality across these opportunities combined with industry-leading project execution capabilities will provide great value to resource owners, partners and our shareholders,” said Neil Chapman, senior vice president, Exxon Mobil Corporation.

“Continued success in Guyana and progress in other upstream growth projects in the U.S. Permian Basin, Mozambique, Papua New Guinea and Brazil are giving us additional confidence in achieving our long-term earnings growth plans that we outlined in March.”

Guyana’s first development, Liza Phase 1, will use a floating production, storage and offloading (FPSO) vessel to produce 120,000 barrels of oil per day, starting by early 2020. Liza Phase 2, which is targeted for sanctioning by the end of this year, will use an FPSO vessel designed to produce up to 220,000 barrels of oil per day and is expected to be producing by mid-2022.

The Liza-5 well successfully tested the northern portion of the Liza field and, along with the giant Payara field, will support a third phase of development in Guyana. The Payara development will target sanctioning in 2019 and will use an FPSO vessel designed to produce approximately 180,000 barrels of oil per day, as early as 2023.

The Longtail well established the Turbot-Longtail area as a potential development hub for recovery of more than 500 million oil-equivalent barrels. Additional prospects to be drilled in this area could increase this estimate.

The collective discoveries on the Stabroek Block to date have established the potential for up to five FPSOs producing over 750,000 barrels per day by 2025. There is potential for additional production from significant undrilled targets and plans for rapid exploration and appraisal drilling, including at the Ranger discovery.

The Stabroek Block is 6.6 million acres (26,800 square kilometers). ExxonMobil affiliate, Esso Exploration and Production Guyana Limited, is operator and holds 45 percent interest in the Stabroek Block. Hess Guyana Exploration Ltd. holds 30 percent interest and CNOOC Nexen Petroleum Guyana Limited holds 25 percent interest.

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Offshore Guyana Oil and Gas Potential is “Massive”

(UPI, Daniel J. Graeber, 23.Jul.2018) – The size of a reservoir off the coast of Guyana is “massive,” the CEO of Hess Corp. said Monday after a multi-million barrel revision to reserve estimates.

Hess and Exxon Mobil on Monday revised the estimate of recoverable reserves at the Stabroek block off the coast of Guyana from 3.2 billion barrels of oil equivalent to more than 4 billion barrels of oil equivalent.

“The Stabroek block is a massive world class resource that keeps getting bigger and better,” Hess Corp. CEO John Hess said in a statement. “Since the end of 2016, the estimate for recoverable resources on the block has quadrupled and we continue to see multi-billion barrels of additional exploration potential on the block.”

Hess said the revision followed the inclusion of data from new discoveries offshore Guyana and the completion of the fifth appraisal well at the Liza oil field. Dubbed Longtail, the latest discovery made near the giant Liza field could be producing about 500,000 barrels per day by late 2023.

The initial phase of development at Liza was sanctioned in June 2016 and called for the use of a floating production, storage and offloading vessel that will lead to an initial production rate of 120,000 barrels of oil per day.

Phase 2 calls for a second FPSO with a gross production capacity of 220,000 barrels per day and planning is already under way for a third phase of development offshore Guyana.

“The collective discoveries on the Stabroek block to date have established the potential for up to five FPSOs producing over 750,000 barrels per day by 2025,” the statement from Hess read.

Hess in June sold off its joint venture interests in the Appalachian shale basin in eastern Ohio to Ascent Resources for $400 million, using the proceeds in part to fund operations offshore Guyana. The company estimates it would cost at least $3.2 billion to fully develop the broader offshore Liza field.

Consultant group Wood Mackenzie said offshore Guyana is a competitive prospect with a break-even price at about $35 per barrel. Brent, the global benchmark for the price of oil, was trading near $74 per barrel on Monday.

Hess reported a net loss of $106 million in the first quarter, compared with a loss of $324 million in the same period in 2017. The company attributed the improvement to higher crude oil prices and lower operating costs.

Hess releases its second quarter earnings report on Wednesday.

***

ExxonMobil Announces 8th Find Offshore Guyana

(Energy Analytics Institute, Piero Stewart, 20.Jun.2018) – Irving, Texas-based Exxon Mobil Corporation’s good luck continues in Guyana.

The oil giant announced it has made its eighth oil discovery offshore Guyana at the Longtail-1 well, creating the potential for additional resource development in the southeast area of the Stabroek Block, Exxon announced in an official statement.

ExxonMobil encountered approximately 256 feet (78 meters) of high-quality, oil-bearing sandstone reservoir. The well was safely drilled to 18,057 feet (5,504 meters) depth in 6,365 feet (1,940 meters) of water. The Stena Carron drillship commenced drilling on May 25, 2018.

“The Longtail discovery is in close proximity to the Turbot discovery southeast of the Liza field,” said ExxonMobil Exploration Company President Steve Greenlee, in the company statement. “Longtail drilling results are under evaluation. However, the combined estimated recoverable resources of Turbot and Longtail will exceed 500 million barrels of oil equivalent, and will contribute to the evaluation of development options in this eastern portion of the block.”

Second Exploration Vessel

ExxonMobil is currently making plans to add a second exploration vessel offshore Guyana in addition to the Stena Carron drillship, bringing its total number of drillships on the Stabroek Block to three. The new vessel will operate in parallel to the Stena Carron to explore the block’s numerous high-value prospects.

The Noble Bob Douglas is completing initial stages of development drilling for Liza Phase 1, for which ExxonMobil announced a funding decision in 2017. Phase 1 will consist of 17 wells connected to a floating production, storage and offloading (FPSO) vessel designed to produce up to 120,000 barrels per day (b/d) of oil. First oil is expected in early 2020. Phase 2 concepts are similar to Phase 1 and involve a second FPSO with production capacity of 220,000 b/d. A third development, Payara, is planned to follow Liza Phase 2, according to ExxonMobil

The Stabroek Block is 6.6 million acres (26,800 square kilometers). Partners in the Stabroek Block include ExxonMobil affiliate Esso Exploration and Production Guyana Limited (Operator, WI 45%. Hess Guyana Exploration Ltd. (WI 30%) and CNOOC Nexen Petroleum Guyana Limited (WI 25%).
***

ExxonMobil Reconfirms March 2020 for First Guyana Oil

(Denis Chabrol, DemeraraWaves, 12.Jun.2018) – ExxonMobil on Tuesday reconfirmed that Guyana will pump up its first barrel of oil in March 2020, even as the Guyana government continued to fend off criticisms of the 2016 production sharing agreement.

Vice President of ExxonMobil Development Company, Lisa Walters said work was well advanced by several companies in Singapore, Brazil and the United States Gulf Coast to ensure that commercial oil production begins in less than two years. “We are on track for first oil in March of 2020,” she said. “In just a little over a year and a half, the Liza Destiny will deliver its first oil to its first tanker offshore,” she added.

ExxonMobil estimates that oil discoveries at Liza, Payara, Snoek and Turbot offshore Guyana total 3.2 billion barrels and would eventually lead to daily production of 500,000 barrels. ExxonMobil estimates that Liza Phase 1 will generate over US$7 billion in royalty and profit oil revenues for Guyana over the life of the project.

Walters said the drill-ship, Noble Bob Douglas, recently started drilling the production wells located at Liza more than 125 miles off the Demerara Coast. She said “all of the design work on the project is nearing completion” and “construction is well-underway worldwide” for the Floating Storage, Production, Storage and Offloading (FPSO) vessel named “Liza Destiny”. SBM Offshore has won the contract to construct that vessel, while TechnicFMC, and Saipem have been hired for sub-sea construction of the umbilical cords and flow-lines. Guyana Shorebase Inc was awarded the contract in June, 2017 for shore-base services and in August, 2017 the Noble Bob Douglas was hired for drilling services.

ExxonMobil’s Country Manager, Rod Henson also used the opportunity of the official start of the Liza Phase 1 Development Programme to show off that in the first quarter of 2018, over US$14 million were spent with Guyanese suppliers; together with its contractors ExxonMobil utilized 262 Guyanese registered suppliers, 227 of which are Guyanese owned.

Minister of Natural Resources, Raphael Trotman reiterated that the revised ExxonMobil Production Sharing Agreement has “the same or very similar contractual terms” as those Guyana has signed with other companies such as Anadarko Petroleum, Ratio, CGX, REPSOL, Ratio, Eco-Atlantic and Mid Atlantic.

“In that regard, they will enjoy the same rights and obligations as every other company that has been contracted by the government to explore and develop our hydrocarbons.

That they were the first to find a large deposit should no redefine their contractual terms or place them in any position less than that enjoyed prior to discovery. For government to do otherwise is not how responsible or how well-organised and governed States function,” she said.

The Minister of Natural Resources said the proceeds of Guyana’s oil production would be fairly shared among all Guyanese without discrimination as part of a process that would eventually lead to the removal of negative labels such as Third World, backwards, underdeveloped and developing from Guyana. “With the blessings that have been revealed, and are within our grasp, we purpose to develop a modern, peaceful and cohesive State-one in which every man, woman and child, without exception, reservation, and/or discrimination of any kind, is able to enjoy the full and equal benefits of the bounty we are about to be bestowed,” he said.
***

Guyana’s Initial Oil Output to Surpass Trinidad

(Energy Analytics Institute, Pietro D. Pitts, 2.Mar.2017) – Sleepy Guyana is gearing up to surpass twin-island nation Trinidad and Tobago in terms of oil production.

Production plans by Irving, Texas-based Exxon Mobil Corporation at the promising Stabroek Block offshore Guyana will assist the small country to initially produce more oil than its Caribbean neighbor Trinidad, which has been producing oil for over a century.

Exxon — which plans to make an investment decision later this year regarding finds at the Stabroek Block, including the Liza, Liza deep and Payara wells – expects production of 100,000 barrels per day in 2020 in the initial phase using a Float Production, Storage and Offloading (FPSO) unit, said Jeff Woodbury, Exxon Mobil Vice President of Investor Relations during a conference call on January 31, 2017.

“Guyana is to become the newest petrostate. It has two neighbors from which to learn what to do, Trinidad, and what not to do, Venezuela,” Francisco J. Monaldi, Ph.D. and Fellow in Latin American Energy Policy & Lecturer in Energy Economics at Rice University’s Baker Institute for Public Policy wrote in a twitter post.

The Stabroek Block covers 6.6 million acres (26,800 square kilometers). The operator of the block is Esso Exploration and Production Guyana Limited with a 45 percent interest. Other partners in the block include: Hess Guyana Exploration Ltd. with a 30 percent interest and CNOOC Nexen Petroleum Guyana Limited with a 25 percent interest.

Trinidad produced an average of around 72,000 barrels per day in the eleven months between January and November of 2016, according to data published in a bulletin by the country’s Ministry of Energy and Energy Industries.

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Sembcorp Unit Completes Repair Job at Brazil Yard

(Sembcorp Marine Ltd., 18.May.2016) – Singapore’s Sembcorp Marine Ltd. announced that its wholly-owned Brazilian subsidiary Estaleiro Jurong Aracruz (EJA) has marked a key operational milestone with the successful completion of the yard’s first vessel repair project.

The Olympic Gemini, a bulk carrier managed by the Company, left EJA May 12, 2016 after a week of repair renewal works on the main deck supporting foundations.

Flagged in Marshall Islands, the 2006-built vessel measures 751 feet (228.99 meters) by 106 feet (32.26 meters) by 65 feet (19.90 meters) and has a deadweight of 82,992 metric tons.

EJA is well-positioned to provide integrated marine and offshore engineering solutions to customers in the South Atlantic, in particular Brazil and Latin America, Gulf of Mexico and West Africa markets. Spanning 203.9 acres (82.5 hectares), the integrated yard features a 1 mile (1.6 kilometer) quay with ample berthage and deepwaters of minus 52.5 feet (16 meters) that enable deep-draft vessels and rigs to berth with ease.

EJA is well-equipped with warehouse facilities, mechanical, piping and electrical workshops, a highly automated steel fabrication facility, as well as painting, blasting, pre-treatment and subassembly capabilities.

Supporting the yard’s operation is a Brazil-flagged giant floating crane with a lifting capacity of 3,600 tons that is capable of modules integratin and heavy lifting operations. Upon full completion, the yard will also have a new floating dock with a lifting capacity of 85,000 tons.

In addition to marine and offshore repairs, modification and upgrading, EJA has capabilities to undertake the construction of drillships, semisubmersibles and jackups, platforms and supply vessels; as well as FPSO integration and topside modules fabrication.

***

Petrobras Reports April Production Levels

(Petrobras, 9.May.2016) – Petrobras’ total oil and natural gas production in April amounted to 2.69 MMboe/d, of which 2.50 MMboe/d were produced in Brazil and 190,000 boe/d abroad.

The average oil production in April was 2.12 MMb/d, up 5 percent compared to the previous month, which was 2.02 MMb/d. In this production, 2.03 MMb/d were produced in Brazil and 89,000 b/d abroad.

The recovery of production compared to previous month’s levels was mainly due to the return to operation of platforms that were in corrective maintenance in March, especially P-31(Albacora field) and P-48 (Caratinga field).

Pre-salt oil production

Petrobras-operated oil and gas production in the pre-salt layer in April was 994,000 boe/d, 9.9 percent lower than the previous month. Petrobras–operated oil output was also 9.4 percent lowered when compared to the previous month to an average of 801,000 b/d. This reduction was mainly due to the scheduled shutdown in FPSO Cidade de Angra dos Reis and FPSO Cidade de Paraty.

Natural gas production

Petrobras’ natural gas production in Brazil, excluding liquefied volume, was 73.5 MMcm/d, up 8.5 percent compared to the previous months (67.8 MMcm/d).

The average production abroad was 17.3 MMcm/d, up 5.5 percent compared to 16.4 MMcm/d reached in the previous month.

***

Petrobras Says Production Reached 2.55 MMBoe/d in March

(Petrobras, 10.Apr.2016) – Petrobras’ oil and natural gas output in March reached 2.55 MMboe/d, including 2.36 MMboe/d produced in Brazil and 183,000 boe/d abroad.

Average oil production in March was 2.02 MMb/d, down 3 percent compared to 2.09 MMb/d in the previous month. Domestic average output stood at 1.94 MMb/d, and average output abroad was 86,000 b/d.

Output compared to the previous month was changed mainly due to lengthy shutdowns on large production units, corrective maintenance on the P-31 which resumed production on March 28, 2016, and a fire aboard the P-48 which resumed normal operation on April 16, 2016.

Average domestic oil output for the first quarter fell to 1.98 MMb/d, due to scheduled production shutdowns during this period, which accounted for 5 percent of output. Scheduled shutdowns are expected to result in 2.5 percent of average output for this year.

Pre-salt oil production

In March, Petrobras-operated oil and gas output from pre-salt fields grew 1.2 percent month-over-month to 1.104 MMboe/d, a new monthly record exceeding February’s record output figure of 1.091 MMboe/d.

Average Petrobras-operated oil output also grew 1.2 percent compared to the previous month, with a figure of 884,000 b/d. This also sets a new monthly record (February average of 874,000 b/d).

Natural gas production

Petrobras’ average natural gas output in Brazil (excluding liquefied gas) stood at 67.8 MMcm/d, down 10 percent compared to the February figure of 75.4 MMcm/d. Average production abroad was 16.4 MMcm/d, up 2.4 percent compared to the previous month’s figure of 16 MMcm/d.

Annual Production Target

With the startup of FPSOs Cidade de Saquarema (Lula Central field) and Cidade de Caraguatatuba (Lapa field) and the lower number of shutdowns scheduled for the second half of the year, Petrobras is set to meet its annual oil output target in Brazil, set at 2.145 MMb/d.

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BrasFELS Signs $141 Mln FPSO Contract

(Keppel Corporation Ltd. 7.Apr.2016) – Singapore’s Keppel Corp. Ltd. announced that its unit Keppel Offshore & Marine Ltd. (Keppel O&M), through its subsidiary, Keppel FELS Brasil SA’s BrasFELS shipyard has been awarded a Floating Production Storage and Offloading (FPSO) module fabrication and integration project by its repeat customer MODEC Offshore Production Systems (Singapore) Pte. Ltd., a MODEC, Inc. group (MODEC) company, for a contract value of over $141 million (BRL 500 million or SGD190 million).

BrasFELS’ work scope for this project comprises the fabrication and integration of 9 topside production modules for the FPSO Cidade de Campos dos Goytacazes MV29. The vessel is expected to arrive at the shipyard by the first quarter of 2017 for the integration phase.

The most established offshore shipyard in the Latin American region, BrasFELS has successfully completed a range of construction, integration, upgrading and repair projects over the years.

“Having delivered a number of milestone offshore and marine projects for the country, BrasFELS has built up a strong track record and established itself as a provider of offshore solutions with strong local content. Our yard is committed to deliver all of our projects with Keppel’s hallmark executional excellence,” said Keppel FELS Brasil CEO and President Kwok Kai Choong.

When completed, the FPSO Cidade de Campos dos Goytacazes MV29 will have the capacity to process 150,000 barrels of oil per day (bopd) and 176.6 million cubic feet (5 million cubic meters) of gas per day. The unit’s storage capacity is 1.6 million barrels of oil.

Slated to depart the shipyard in the third quarter of 2017, the FPSO will be deployed at Tartaruga Verde and Tartaruga Mestica Fields, in the Campos Basin, off the coast of Rio de Janeiro.

“Three units, which have been completed safely and ahead of schedule, are operating successfully in their respective fields,” said MODEC, Inc. Executive Managing Officer Sateesh Dev.

BrasFELS’ current job for MODEC is the integration and commissioning of the FPSO Cidade de Caraguatatuba MV27. The FPSO is expected to arrive at BrasFELS in the second quarter of 2016, and will be deployed in the Lapa Field, Santos Basin, Brazil.

The FPSO Cidade de Itaguai MV26, which was delivered by BrasFELS to MODEC in mid-2015, achieved first oil production four months ahead of the schedule, in the Iracema Norte Area of Lula Field in Brazil.

In the past five years, BrasFELS delivered five FPSO projects safely and ahead of schedule, of which three were for MODEC.

The above contract is not expected to have a material impact on the net tangible assets or earnings per share of Keppel Corporation Limited for the current financial year.

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FPSO Cidade de Marica Arrives in Brazil

(SBM Offshore B.V., 10.Jul.2015) – SBM Offshore announced the arrival of FPSO Cidade de Marica at BRASA, Brazil. The SBM Offshore vessel berthed safely at the Niteroi-Rio based yard 9.Jul.2015. She had arrived in Brazilian waters midJune, following her 10,625 nautical miles (Nm) or 19,678 kilometers voyage from China.

FPSO Cidade de Marica is one of two carbon-copy FPSOs being constructed from the blueprint for FPSO Cidade de Ilhabela, the mother ship, which sailed from Brasa to commence production in Nov.2014. The FPSO is the deepest in SBM’s operating fleet at 7,021 feet (2,140 meters) and has the largest capacity at 150,000 b/d of oil.

“We are happy with the progress to date on Marica and we look forward to the delivery of the FPSO to our client once the BRASA scope is completed. We expect her to follow in the footsteps of her mother ship FPSO Cidade de Ilhabela, which has been successfully producing offshore Brazil for eight months and is an example of the world-class standards to which SBM aspires. All our teams are working hard to achieve our delivery target for Marica, the third pre-salt FPSO in the series of four that SBM is providing to Petrobras,” said SBM Offshore COO Philippe Barril.

“The arrival of FPSO Cidade de Marica to BRASA represents a newsworthy milestone for SBM Offshore and a further step on the road to delivery. It demonstrates SBM’s effective global project management for her conversion, which is being jointly conducted from our Regional Centers in Holland, Monaco and Brazil.

As a joint venture partner with Synergy in BRASA shipyard, SBM is very proud to welcome her to the quayside for the final integration of her modules,” said Project Director John Perkins.

Conversion work on the hull and some module integration was completed in China before she set sail in Apr.2015 for Brazil. Cidade de Marica is the second FPSO to moor and be integrated at BRASA shipyard since it opened in 2012. Project Manager Martijn Kleijn says “Integration of the hull and topsides will take place at BRASA where some of the modules have also been fabricated. The yard is ready to begin the module lifting phase using the yard’s Pelicano-1 barge crane. Additional modules were constructed and delivered by EBSE, a Rio yard that SBM works closely with as part of its development of local content solutions.”

FPSO CIDADE DE MARICA AND FPSO CIDADE DE SAQUAREMA

The FPSO Cidade de Marica is destined for the Lula field in the pre-salt province offshore Brazil. BM-S-11 block is under concession to a consortium comprised of the following companies: Petrobras (WI 65%), BG E&P Brasil Ltda. (WI 25%), and Petrogal Brasil S.A. (WI 10%). Her sister ship – FPSO Cidade de Saquarema which is currently in the CXG yard in China from where Marica sailed – is also destined for the same field and is being converted in parallel. Planned delivery for FPSOs Cidade de Marica and Cidade de Saquarema is expected respectively by end 2015 and early 2016. SBM Offshore’s contract with BM-S-11 subsidiary Tupi BV is for the 22-year charter and operation of the two FPSOs.

The FPSOs are owned and will be operated by a JV owned by affiliated companies of SBM Offshore, Mitsubishi Corporation, Nippon Yusen Kabushiki Kaisha, and Queiroz Galvao Oleo e Gas S.A. in which SBM Offshore shareholding is 56%.

The twin FPSOs will benefit from the technological expertise that SBM Offshore acquired during the successful conversion and operational experience of FPSO Cidade de Ilhabela and FPSO Cidade de Paraty.

FOUR FPSOS OFFSHORE PRE-SALT BRAZIL:

1) 2013 Cidade de Paraty

2) 2014 Cidade de Ilhabela

3) 2015 Cidade de Marica

4) 2016 Cidade de Saquarema

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