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Mercosur Mercosur Energy Energy IntegrationIntegration
Hugo A. D’Angelo Hugo A. D’Angelo (h)(h) Senior Consultant Oil & Senior Consultant Oil & Natural Gas – Thompson & Knight LLP – Rio de Natural Gas – Thompson & Knight LLP – Rio de Janeiro, Brazil Janeiro, Brazil
PB 100% and PB/Partners Other Companies
59 thousand bpd oil59 thousand bpd oil9.375 thousand 9.375 thousand
mm33/d gas/d gas93 thousand bpd oil93 thousand bpd oil2.383 thousand m2.383 thousand m33/d /d
gasgas
52 thousand bpd oil52 thousand bpd oil4.608 thousand m4.608 thousand m33/d /d
gasgas
52 thousand bpd oil52 thousand bpd oil5.402 thousand m5.402 thousand m33/d /d
gasgas
21 thousand bpd oil21 thousand bpd oil1.112 thousand m1.112 thousand m33/d /d
gasgas
Campos BasinCampos Basin1.447 thousand bpd oil (84%)1.447 thousand bpd oil (84%)
21.451 thousand m21.451 thousand m33/d gas (47%)/d gas (47%)1,5 thousand bpd oil1,5 thousand bpd oil1.112 thousand m1.112 thousand m33/d /d
gasgas
DOMESTIC PRODUCTION
Oil: 1.729 thousand bpd Gas: 45.563 thousand m3/d
Total: 2.016 thousand boe/d
4 thousand bpd oil4 thousand bpd oil120 thousand m120 thousand m33/d gas/d gas
Production per Basin (May/2005)
Equatorial Margin Frontier Basins Frontier Basins
Natural Gas & Light OilNatural Gas & Light Oil High Risks and Economic High Risks and Economic
ResultsResults
Basins of Espírito Santo, Campos & Santos Appraisal of the Recent Heavy Oil Findings Appraisal of the Recent Light Oil, Gas & Condensate
Findings Exploration of the Pre-Salt & Albian Carbonates
Moderate Risks & High Economic Results
Exploration Perspectives:
Solimões & Amazonas Light Oil, Natural Gas & Light Oil, Natural Gas &
Condensate GasCondensate Gas Moderate Risks and Economic Moderate Risks and Economic
ResultsResults
Basins of the Northeast Margin Natural Gas & Light OilNatural Gas & Light Oil
Moderate Risks & Low Economic Moderate Risks & Low Economic ResultsResults
Basins of the East Margin Natural Gas & Light Oil
Moderate Risks & High Economic Moderate Risks & High Economic ResultsResults
1,7 tcf
ReservesNortheast
7,7 tcf
ReservesSouth-
Southeast
1,7 tcf
Solimões Basin
Gas Proved Reserves in Brazil (Dec/2004)
11,1 tcfBRAZIL
tcf = trillion cubic feet = 28,32 billion m3
GASProved ReservesBilion m3
TOTAL
SOUTH/SOUTHEAST
NORTH
NORTHEAST 48,0
215,6
49,5
313,1
< 22º API(heavy oil)
44% 30%11%15%
Gas31 º API (light oil)
22 – 31 º API(intermediate oil)
Profile of Proved Reserves in Brazil
Main Projects in CourseMain Projects in CourseEspírito Santo and Bahia BasinEspírito Santo and Bahia Basin
Implementation of Manati Project in Bahia, with a production capacity of 6 million m3/d, through 7 wells, in 2006;
Operation of Peroá-Cangoá Project (offshore) in 2005, with a capacity of 3,6 million m3/d, integrated to the expansion of the gas dristribution system to Vitória (ES);
Operation of Golfinho Basin (gas associated to light oil), with a supply of 2,7 million m3/d, starting in the 2nd semester of 2006;
Expansion of Peroá-Cangoá Project (offshore) in 2007, to approximately 5,5 million m3/d of potential supply;
Optimization of gas from the Parque das Baleias Fields, associated to heavy oil in deep water, from 2010 on;
BCAM-40Bahia Basin
LIGHT OIL DEEP WATER
HEAVY OIL DEEP WATER
LIGHT OIL ULTRA DEEP
WATER
OIL SOIL
SHALLOWWATER
GAS SOIL
SHALLOW WATER
Espírito SantoEspírito Santo
Main Projects in CourseMain Projects in CourseSantos BasinSantos Basin
The appraisal phase of the natural gas reserves in Santos Basin should be extended until 2006 (the discovered volume is estimated in 14,8 tcf or 419 billion m3)The Mexilhão Field (BS-400) had its commerciality declared in 2003 (72 billion m3 of proved gas reserves)The studies for determination of development costs of Santos Basin natural gas reserves are still in course Block BS-400: deep wells (5.000 – 5.500 m), with water depths between 400 and 500 mBlock BS-500: deep wells (~ 6.000 m), with water depths around 1.500 m
A Expansão das Fronteiras Exploratórias Surgimento de Novas Províncias Produtoras
Basins found until 1984
Basins found between 1984/2001
Basins found in 2002/2003
Oil and Gas findings under appraisal
BS-500
BC-20Light Gas and OilLight Gas and Oil
ESS-130 ESS-130 (Light Oil)(Light Oil)
(Light Oil)(Light Oil)
GasGas
(Heavy Oil)(Heavy Oil)
(Heavy Oil)(Heavy Oil)
Santos Basin
Appraisal of Natural Gas Findings in the Santos BasinAppraisal of Natural Gas Findings in the Santos Basin
BS-500BS-500 (100% PB)(100% PB)
BS-400BS-400(100% PB)(100% PB)
BS-1BS-1(60% El Paso(60% El Paso
40% PB)40% PB)
Overview of the Brazilian MarketOverview of the Brazilian Market Petrobras has been the main investor in the Brazilian natural gas Petrobras has been the main investor in the Brazilian natural gas
industry and will continue to perform high investments in order to industry and will continue to perform high investments in order to expand the supply and to develop the gas domestic market; expand the supply and to develop the gas domestic market;
The new gas discoveries have ensured increasing supply, in The new gas discoveries have ensured increasing supply, in compliance with the market growth – which is high in all compliance with the market growth – which is high in all segmentssegments;;
The participation of gas in the Brazilian energy matrix is based on The participation of gas in the Brazilian energy matrix is based on investments integrated with the capacity of ensuring the investments integrated with the capacity of ensuring the necessary scale to the development of the national gas industry in necessary scale to the development of the national gas industry in Brazil;Brazil;
The projection of expansion of natural gas into the brazilian The projection of expansion of natural gas into the brazilian energy matrix should be based on the expansion of the energy matrix should be based on the expansion of the distributing network and competitiveness;distributing network and competitiveness;
Infrastructure needs:Infrastructure needs: Market interconnection through gas pipelinesMarket interconnection through gas pipelines High costs to meet the demand expansionHigh costs to meet the demand expansion
Northeast Gas Pipeline Network GASENE Gas Pipeline (Southeast - Northeast) Southeast Gas Pipeline Network Urucu - Coari - Manaus Gas Pipeline
Main Gas Projects for Capacity Expansion
Fortaleza
Recife
Maceió
Aracajú
Salvador
Pecém
MossoróGuamaré
Açu
AcariPedra Lavrada
Campina Grande
Riacho das AlmasCaruaru
Pilar
Ipojuca
TermoPE
Carmópolis
Itaporanga
Conde
Catu
Aracati
Termoaçu
TermofortalezaTermoceará (MPX)
TermofafenTermobahia
Termocamaçari
Northeast Gas Pipeline Network
Gasfor II (Mossoró – Pecém)
Total Length: 302 km
Diameter: 20”
Capacity: 3 Million m3 / day
Nordestão II (Pilar – Mossoró):
Total Length : 510 km
Diameter: 24“
Capacity: 8 Million m3 / day
Catu - Pilar:
Total Length: 461 km
Diameter: 26“
Capacity: 8 Million m3 / day
GASENE Gas Pipeline (Southeast - Northeast)
GASENE:
Total Length: 1.370 km
Diameter: 26” / 28“.
Capacity: 20 Million m3 / day
States
Number of Cities:
Rio de Janeiro : 05
Espírito Santo : 17
Bahia : 45
B.Campos
Gasbel
REPLAN REDUC
RPBC
REVAPRECAP
REGAP
#14Ecomp
São Carlos
Campinas -Rio
B.Santos
Congonhas
Itu
Cabiúnas
Poços de CaldasGasbol
10”x 63km
28”x 453km
16”x 72km
32”x 68km
São Paulo Coastal Region
Taubaté
18”x 79km
18”x 72km
18”x 68km
Campos Basin
Gasbel
REPLAN REDUC
RPBC
REVAPRECAP
REGAP
#14Ecomp
São Carlos
Campinas-Rio
Santos Basin
Congonhas
Itu
Cabiúnas
Poços de CaldasGasbol
10”x 63km
28”x 453km
16”x 72km
32”x 68kmTaubaté
18”x 79km
18”x 72km
18”x 68km
Southeast Gas Pipeline Network
Rio Iça
CARAUARI
Rio Negro
R i o
J a p u r á
R
i o
So l i m õ es
Rio Madeira
Rio Tapuá
Rio Ju
ruá
Rio Tefé
Rio Purus
Rio Purus
Rio Coa
ri
URUCU province
COARITEFÉ
MANAUS
RIO BRANCO
RESERVA
BALBINA
SAMUEL
Gas Pipeline Coari - Manaus
Gas Pipeline Urucu - Porto Velho
Gas Pipeline Urucu – Coari
Manaus Thermoelectric Power Plant
URUCU Rio Urucu
GAS PIPELINE URUCU- MANAUSLength: 725 kmDiameter : 20” / 22”
GAS PIPELINE URUCU - PORTO VELHOLength: 550 kmDiameter : 14”
Urucu - Coari - Manaus Gas Pipeline
Brazilian Market ChallengesBrazilian Market Challenges IntegrationIntegration
Increase the interconnection with Latin AmericaIncrease the interconnection with Latin America MarketsMarkets
Expand thermal generation in Brazil (~ 90% domestic market is Expand thermal generation in Brazil (~ 90% domestic market is provided for Hydroelectric system)provided for Hydroelectric system)
Supply GuaranteeSupply Guarantee Ensure natural gas supply (Bolivian gas v new discoveries en Ensure natural gas supply (Bolivian gas v new discoveries en
Santos basin)Santos basin) short / medium / long termshort / medium / long term
Clear RulesClear Rules New Natural Gas Regulation New Natural Gas Regulation Transport Access (open access v. monopoly)Transport Access (open access v. monopoly) Imports/Exports rules (Tax benefit)Imports/Exports rules (Tax benefit) Market prices (Competitive prices )Market prices (Competitive prices )
Authorization (ANP)Authorization (ANP) Free initiativeFree initiative
• TracingTracing• CapacityCapacity
Negotiated Access and Indirect Tax RulesNegotiated Access and Indirect Tax Rules• Agent negotiated rate (Gasbol in US$)Agent negotiated rate (Gasbol in US$)• Regulator intervenes in conflict resolutions (gas transporRegulator intervenes in conflict resolutions (gas transpor
Operations performed by each TransporterOperations performed by each Transporter• Negotiated interconnection operational agreementsNegotiated interconnection operational agreements
Market Risk transferred to the ShippersMarket Risk transferred to the Shippers• SoP contracts paid by capacitySoP contracts paid by capacity
Transporters assume Contractual and Operational RisksTransporters assume Contractual and Operational Risks• Contract Revision RequestContract Revision Request• Contractual penalties due to unavailabilityContractual penalties due to unavailability
NATURAL GAS TRANSPORTATION
Brazilian Natural Gas RegulationBrazilian Natural Gas Regulation
PARAGUAi
BRASIL
URUGUAI
BOLÍVIAPERU
CH
IL E
MONTEVIDEO
PORTO ALEGRE
SANTA CRUZ
SANTIAGO
BUENOS AIRES
ARGENTINA
SAO PAULO
RIO DE JANEIRO
URUGUAIANA
BAHIA BLANCA
EL CONDOR
PAYSANDU
MEJILLONESTOCOPILLA
LA MORA
LOMA LA LATA
CUIABA
CONCEPCION
CORNEJO
TUCUMAN
SAN JERONIMO
ELECTRIC POWER DEFICIT 2005 / 2008
500 Mw
GAS DEFICIT 2008 / 2009
10 a 20 Mm3/d
GAS DEFICIT DURING WINTER
2005 / 200810 - 15 Mm3/d GAS DEFICIT
2005 / 200815 - 30 Mm3/d
LARGE GAS RESERVESREDUCED DOMESTIC CONSUMPTION REGULATORY/pOLITICAL UNCERTAINTYINEED HEAVY INVESTMENTS
GAS IN THE SOUTHERN CONEGAS IN THE SOUTHERN CONE
PARAGUAi
BRASIL
URUGUAI
BOLÍVIAPERU
CH
IL E
MONTEVIDEO
PORTO ALEGRE
SANTA CRUZ
SANTIAGO
BUENOS AIRES
ARGENTINA
SAO PAULO
RIO DE JANEIRO
URUGUAIANA
BAHIA BLANCA
EL CONDOR
PAYSANDU
MEJILLONESTOCOPILLA
LA MORA
LOMA LA LATA
CUIABA
CONCEPCION
CORNEJO
TUCUMAN
SAN JERONIMO
3 – Expansion of the BTB Gas Pipeline rump up and supplying of the thermal plants
3
1 – New Gas Pipeline from Bolivia to Argentina / South of Brazil
1
5 – Investments in E&P in Neuquen stable supply for Argentina and Chile
5
2 – Finalize the project of TSB to bring gas from Argentina / Bolivia to the South of Brazil
2
4 – Development of the Gas of Santos Brazilian Market (Southeast and Northeast)
4 Logistic Investments> US$ 3 bi
Investments in E&P
> US$ 4 bi
GAS IN THE SOUTHERN CONEGAS IN THE SOUTHERN CONE
ARGENTINA
COLOMBIA
ECUADOR
PERU
BRAZIL
PARAGUAY
URUGUAY
VENEZUELA
BOLIVIA Cuiabá
Belo Horizonte
Porto Alegre
Buenos Aires
Santiago
Lima
VitóriaRio de Janeiro
São Paulo
Recife
Salvador
Montevideo
La Paz
Fortaleza
Caracas
Bogotá Manaus
Porto Velho
Urucu
Pisco
Brasília
EUA EuropaMexico/EUA
Chile
NE
Pacific
Atlantic
Regas Terminal
LNG Terminal
Existing Gas pipelineExpected Gas pipeline
Alternatives for Physical IntegrationAlternatives for Physical Integration
GNEA
ConclusionConclusion
Brazil: Brazil:
Expansion of the Natural Gas Pipeline GridExpansion of the Natural Gas Pipeline Grid Investments in Exploration & ProductionInvestments in Exploration & Production Infrastructure Infrastructure Predictable regulatory environmentPredictable regulatory environment Definition of the Natural Gas role in the energy matrix Definition of the Natural Gas role in the energy matrix The gas industry in the Southern Cone has different levels The gas industry in the Southern Cone has different levels
of maturity and size, with great synergy.of maturity and size, with great synergy. The potential demand in Brazil is effective through the The potential demand in Brazil is effective through the
investors’ investment, with the support of Federal and State investors’ investment, with the support of Federal and State Government and ANP. Government and ANP.
ConclusionConclusionRegional Integration:Regional Integration: The integration of Natural Gas markets of the Southern Cone is essential.The integration of Natural Gas markets of the Southern Cone is essential. Low level of coordination between institutions, multilateral agencies and private investors of several countriesLow level of coordination between institutions, multilateral agencies and private investors of several countries
Lack of a common mechanism of price formation between countriesLack of a common mechanism of price formation between countries Lack of regulatory framework for transnational projectsLack of regulatory framework for transnational projects
Lower gas prices, limiting the development of gas reserves and infrastructureLower gas prices, limiting the development of gas reserves and infrastructure Coordination between countries and institutions and acknowledgement of the socio-economic differencesCoordination between countries and institutions and acknowledgement of the socio-economic differences Gov’ nationalist “populism” re-emerges in the Southern ConeGov’ nationalist “populism” re-emerges in the Southern Cone
Hugo D’AngeloHugo D’AngeloThompson & Knight LLPThompson & Knight LLPTel.: (55-21) 2271-4210Tel.: (55-21) 2271-4210Fax: (55-21) 2271-4211Fax: (55-21) 2271-4211
E-mail: E-mail: [email protected]@tklaw.comwww.tklaw.com www.tklaw.com
