Pre-salt must gain space in the global market, says study – 06/29/2023 – Market

Oil production in the Brazilian pre-salt layer should gain more share in the global market in the coming years, but actions advocated by the Lula government may hinder this movement, assesses a study by Bloomberg Intelligence.

The study, obtained by Sheetpoints out that the pre-salt has been standing out especially for two points: the extraction has a low cost and generates less carbon emissions.

“Petrobras is starting to put into operation several new solutions that can significantly increase oil production while reducing extraction costs”, points out the analysis.

The new technologies have been under development for some years and should start operating soon in two of the main pre-salt fields, Búzios and Mero.

One of the methods is called WAG (water-alternating gas), capable of increasing oil withdrawal and maintaining pressure in the wells, which extends their useful life. The other, called Hisep, already separates oil and gas at the well exit, and not on the platform, which reduces vessel costs.

“There was an expectation that the cost of extraction would be 10 dollars per barrel, but it is below four dollars, even with all the inflation that has occurred in the supply chain”, says Fernando Valle, one of the authors of the study, in an interview. to the Sheet.

Pre-salt is the generic name for a large amount of oil reserves, discovered since 2006, which are located at great depths and below an enormous layer of salt. The reserves are in the ocean, close to the states of São Paulo, Rio de Janeiro and Espírito Santo.

The pre-salt also stands out for having gigantic stocks: the Búzios field has more than 8 billion barrels, and the Tupi field, 7 million barrels, for example.

Valle explains that extracting more oil from the same well makes it unnecessary to open other drilling sites, which reduces the environmental impact. Another point is that a good part of the gas extracted with the oil is reinjected in the wells, and not burned on the platforms, as in other cases. This helps to reduce carbon emissions.

For the analyst, the lowering of production can benefit consumers even more after the change in Petrobras’ pricing policy. Announced in May, the new rule now takes into account the cost of production plus a profit margin, instead of focusing on international quotations and import costs.

At the same time, the increase in oil production may increase Brazilian exports and bring more foreign money into the Brazilian economy.

According to the analyst, around 93% of the petroleum derivatives consumed in Brazil are of national origin, and this percentage should not increase much in the coming years, since the 7% imported are items from categories that the country does not produce, but which are necessary for the production of fuels.

The good extraction conditions should attract even more attention from large international companies to the pre-salt layer. A change in the law, approved at the beginning of the Michel Temer (MDB) government, in 2016, meant that foreign operators could explore pre-salt fields without the participation of Petrobras.

According to Valle, of the major global oil companies, only Chevron and BP have yet to participate in actions in the pre-salt layer.

At the end of the year, for example, the Norwegian Equinor should start its production in the Bacalhau field, 185 km from Ilhabela (SP). The project is carried out in partnership with ExxonMobil.

Analysts point out that the increase in oil production in the pre-salt layer should continue to accelerate at least until 2026 or 2027, as the necessary platforms have already been ordered and the contracts have already been signed.

However, they estimate that the Lula government could delay the advance of exploration from 2027, if it invests in ideas such as demanding greater participation from Brazilian suppliers in exploration or trying to change Petrobras’ action policies, such as directing large investments to other areas, such as offshore wind energy.

Valle criticizes, for example, the flaws in plans for building refineries by Petrobras in the past decade. “It is no exaggeration to say that a lot of money was wasted. We tried to build Abreu e Lima, Premium 1, Premium 2 and Comperj. We spent more than R$ 100 billion on these projects and only half of Abreu e Lima was ready. With the capital, invested, it was possible to have bought two or three of the largest American refining companies, with capacity to [refinar] 5 to 6 million barrels a day. [Com Abreu e Lima] we managed 123,000 barrels a day,” he compares.

Another advantage of pre-salt is that its composition is of the “medium sweet” type, which allows the generation of other derivatives in addition to gasoline, such as aviation kerosene.

In the medium category, about 45% of each barrel is gasoline, while barrels extracted from shale reserves, common in the US, generate around 55% of gasoline.

At the same time, pre-salt oil can be transported more easily than oil extracted in countries such as Colombia, Venezuela and Canada. “Heavier oil needs several diluents to be transported. Medium oil also has less sulfur, which reduces the risk of explosion. If there is a lot of sulfur, there is an extra cost to remove the substance”, explains Valle.