Total is an acknowledged subsea and deepwater exploration and production (E&P) pioneer, having begun to explore subsea technology in the late 1960s, and being one of the early players in the deepwater scene with the Girassol field located in Block 17, offshore Angola. Girassol was one of the early deepwater fields developed, with depths ranging from 1,250 to 1,400 meters.
Petrobras was also active back then in the Campos Basin with deepwater production systems for the Marlim South well completed in 1,709 meters in 1997 followed in 1999 by Roncador subsea well in 1,855 meters. After the discovery of the first deepwater pre-salt plays offshore Brazil around 2007, Petrobras significantly increased its investment in deepwater research and continued to do so after 2014, amidst all the crisis and turmoil, and it has paid off. The significant decrease in drilling times at complex pre-salt reservoirs, maintaining high efficiency and safety standards, elevated Brazil’s national operator to a recognized deepwater development leader globally.
Both Total and Petrobras have amassed a priceless wealth of experience in deepwater E&P. Joining forces in selected deepwater developments globally can truly be a win-win situation for the French and Brazilian players. An open policy by the new Brazilian government toward pre-salt exploration by major international oil companies (IOC) is key for increased foreign investment in the local oil and gas market – once totally dependent on Petrobras – while also allowing the national operator to continue its harsh but necessary debt cleanup through divestitures without affecting the pre-salt’s development momentum.
In January 2018, Total became operator of the Lapa pre-salt field, being the first international company to operate a producing field in the Brazilian pre-salt. These proven pre-salt reserves that Total is lifting from offshore Brazil will eventually increase Total’s global production and positively impact its revenues.
Since 2016, Total and Petrobras have been working on a memorandum of understanding (MOU) toward a strategic partnership covering upstream and downstream activities in Brazil and other countries. According to the terms of the agreement, both companies will collaborate in key areas of mutual interest and evaluate opportunities in Brazil to jointly benefit from their respective experience in all segments of the oil and gas operations, especially in deep water, where both players are at the forefront in terms of technology and experience. The partners’ vast combined offshore experience will serve to boost production efficiency in deep water, where the partnership is expected to mitigate risks in projects with high investment and complexity, such as the pre-salt.
Currently, Petrobras and Total are associated in around 15 consortiums working in E&P worldwide, nine of which are located in Brazil, including development of the giant Libra area in the Brazilian Santos Basin pre-salt. Other areas are in the Chinook field in the U.S. Gulf of Mexico, and Bolivia’s San Alberto and San Antonio gas fields. They are also associated with the Bolivia-Brazil gas pipeline development.
Strategic Partnership in O&G
Petrobras assigned 10% rights of the Lapa field in block BM-S-9 to Total, and later exercised the option to sell the remainder of its interest in late 2018, as stipulated in the agreement signed in January 2018, when Total acquired 35% rights from Petrobras, resulting in the operation of the field. The current production of the field of Lapa is about 30 thousand bpd. The new composition of the consortium is now: Total as operator (45%), BG E & P Brasil - subsidiary company of Royal Dutch Shell plc (30%) and RepsolSinopec Brasil (25%).
In the scope of this strategic partnership for the Iara pre-salt area, the companies had already carried out transactions that resulted in the payment, in January 2018, of $1.95 billion to Petrobras, in addition to a $400 million credit facility, which may be activated by Petrobras to carry out part of its investments in the fields of the Iara area, and contingent payments in the amount of $150 million. The Iara area is situated in the Santos Basin, about 230km off the coast of Rio de Janeiro. The field contains light oil and lies at a water depth of 2,230m. Is is located near the giant Lula field. The Iara field is operated by Petrobras and is owned by a consortium comprised of Petrobras (42.5%), Shell (25%), Total (22.5%) and Petrogal (10%). The Iara area, contains the Sururu, Berbigão and Oeste de Atapu fields, in the BM-S-11A block, in the Santos Basin pre-salt.