Brazil thinks global industry cannot offer installed capacity for pre-salt yet

Sep 28, 2008 02:00 AM

The current installed capacity of the global industry that provides goods and services to the oil and gas sector will not suffice to meet the future demand Petrobras will have for its pre-salt projects. This is the assessment of Petrobras's president and CEO, José Sergio Gabrielli de Azevedo, who participated in the closing ceremony of the Rio Oil & Gas, on September 18, 2008.
According to Gabrielli, it will be necessary to boost capacity not only in Brazil, but all over the world, and the company will use its buying power to help the country attract investments to host the industry's global expansion.

"We have the leverage power due to the size of our company. We will have to anticipate agreements, support strategic suppliers who are interested in enhancing their capacity, raise funds, and attract new entrants. This is a challenge, not only for Petrobras and its partners, but for its suppliers too, who have a big opportunity to grow," he explained.
Signing long-term agreements with suppliers and launching an aggressive invitation for bidding program are also strategies the company has been using to face the upcoming challenges, among which the pre-salt. By 2015, 175 invitations for bids will be made, and 55 drilling rigs ordered (28 of which to be made in Brazil).

For the pre-salt, Gabrielli emphasized that the challenges involve logistics, developing new materials and transporting the gas. There is also the production model issue. He emphasized Petrobras will kick-off production based on the model that is currently in effect, but that it will have to replace this model as it gains more knowledge.
Sixty-two (62) % of the pre-salt province, which covers more than 112,000 sq km, are not under concessions yet, and Petrobras participates in 31 % of the area that has already been granted (some 35,000 sq km). Gabrielli made it clear that although it is legitimate for the Government to decide what to do with the areas that are not yet under concession, it is important to keep in mind that in the current moment of the global economy, the strategic importance of oil and gas is even bigger.

"Major discoveries have become scarcer in the world since 2000. We have recent discoveries and they are already producing, such as Jubarte, for example," he said.
During his conference, he analyzed the global oil market, underpinning the fact that, in the past three years, the countries that had the biggest demand for oil were China, India, Africa, South America, particularly Brazil, and Russia, which needed more energy to support their growth. Parallel, Europe, the United States and Japan experienced a reduction in their demand for fuel. He also emphasized that global oil supply by the OPEC nations was below expected.

"The increase in the global reserves derived much more from access to technology, which improved the recovery rates, than from new discoveries. The cost of discovery and development has risen since 1995 due to a series of factors, among which higher input prices. Offshore drillingrig prices, for example, do not stop growing," he explained.
No matter how complicated this scenario may be, Gabrielli emphasized Brazil must look far into the future.
"This is a time to face challenges, to be optimistic about the future and aware of reality. The decisions we make today will have impacts ten, fifteen years from no for Petrobras and for those that surround us," completed Gabrielli.

Source / Petrobras
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