Entrevista exclusiva com Lula pré-sal anexo

COMENTÁRIO DO BLOGUEIRO: Prezados, abaixo uma reportagem oferecida pelo próprio autor (Peter Howard Wertheim) para ser postada no Blog. Senti-me honrado. Muito Obrigado Peter.

---------- Forwarded message ----------
From: Peter Howard Wertheim

Date: 2010/1/24
Subject: Entrevista exclusiva com Lula pré-sal anexo
To: Luciano da Costa Elias

Oi,

Anexo Lula on pré-sal.

Abraço,

Peter

Favor enviar link qdo artigo for publicado. A Offshore magazine pertence ao grupo PennWell fundado a mais de 100 anos em Houston, Texas. PennWell Corporation publica 40 revistas e cerca de 100 online newsletters, nos EUA e Inglaterra..


Luciano da Costa Elias escreveu:

Sim, Posso publicar no meu blog.
Basta que me envie a entrevista da mesma maneira como você gostaria de publicá-la que eu mando para o blog.
Obrigado por acompanhar o meu blog de óleo e Gás.
um abraço,
Luciano
-------------------------------------------------------

 

OFFSHORE MAGAZINE

October 2009                  

Bullish on Brazil

Lula rides wave of optimism over pre-salt  

Peter Howard Wertheim 
Contributing Editor

President Luiz Inácio Lula da Silva in his office. Photo courtesy of Ricardo Stuckert/PR.

In this exclusive interview for Offshore magazine, Brazil's President Luiz Inácio Lula da Silva exudes optimism when talking about the significance of the new rules proposed for the development of potentially vast oilfields buried beneath a thick layer of salt off the coast of Brazil.

  Notwithstanding the global economic downturn, the string of discoveries of pre-salt fields has generated excitement among Brazilians who are caught up by something similar to a feverish black gold rush fueled by massive and constant media coverage about the potential staggering reserves of light oil and the huge amount of cash the pre-salt may yield.

Although the total volume of reserves is not known, it seems enough to vault Brazil well into the Top 10 oil-producing countries. Analysts are estimating that 80-100 Bbbl of oil may be found in the whole pre-salt area, some 149,000 sq km (57,529 sq mi) off Brazil's southeast coast.

The 28% of the pre-salt area that was already contracted under the concession regime is being developed by Petrobras in partnership with foreign oil companies including Royal Dutch Shell, ExxonMobil, Amerada Hess, BG, Repsol, and Galp Energia.

In the prolific Santos basin alone, where huge pre-salt oil reserves have already been found, these companies are expected to invest $150-200 billion in exploration and production through 2020. Santos basin is predicted to produce 2 MMb/d by 2020, more than Brazil's current total daily output of 1.9 MMb/d.

On Aug. 31, the Brazilian government sent to Congress four draft bills with new legislation for the development of the remaining 107,228 sq km (41,401 sq mi) or 72% of the pre-salt area that was not yet auctioned, as well as any other area considered strategic for the country.

However, the huge nationalistic celebration organized to launch the proposal did not cool heated discussions concerning the distribution of royalties among producing states; regarding the effectiveness of the proposed law to attract foreign investors, and the role of the proposed state oil company that will administrate the pre-salt area.

President Lula's draft bills to change regulation of the pre-salt are undergoing vigorous debate in Congress with hundreds of changes proposed.

Early on in the debates, the focus was on the extraordinary power granted by Lula to Petrobras to operate all new subsalt concessions in the country.

Nevertheless, Lula is confident that the regulatory changes in their essence will be approved by a majority coalition of party loyalists and allied centrists.

Lula has the ability to make friends among unlikely allies: "That is my man, right here. I love this guy," US President Barrack Obama said, while shaking Lula's hand at the G20 summit in London, and Fidel Castro refers to him in the warmest of fraternal terms as "our brother Lula." The former shoe shine boy, lathe operator, union leader, and hugely popular president well into his second of his two-term administration, Lula has an understanding of his nation's psyche, now poised between its newfound eminence on a global scale and troubling reminders of past economic crises.

With his message of hopeful enthusiasm, it is easy to believe that the legislative effort will pass.

"Brazilians no longer need to feel an inferiority complex. The pre-salt wealth could significantly boost Brazil's economy and boost the country's influence on the world stage, while shifting the dynamics of global resource geopolitics," he says.

The president sees oil as one of the factors within a major development project for the country.

"Petrobras' innovative technology, know how, and persistence in very challenging environments led to these massive oil discoveries, showing what Brazilians are capable of in terms of generating wealth," Lula says, defending the company's major role in his proposal to calibrate development of pre-salt riches in accordance to national interests.

One of these will be creating jobs. The Brazilian Association of Industry and Machinery (Abimaq) estimates that a minimum of 500,000 new jobs will be created to supply $211 billion worth of equipment that will be needed to extract the pre-salt oil and gas up to 2020. And this is only one segment of the industry.

The President emphasizes that the pre-salt oil will be refined in Brazil and exported in the form of oil products, establishing lasting industries onshore for transportation, shipping, and heavy industry such as port infrastructure: "Oil is what we can do with it, including the expansion of industries that provide exploration, production and refining equipment, enhancement of ship building firms, or to fund science, to deploy advanced technologies, as well as promote educational development and fight poverty."

Offshore: Mr. President, based upon the experience of countries that use the production sharing agreement model, what do you say to critics who argue that changing the regulatory model from concession to production sharing may scare away foreign investments?

President Luiz Inácio Lula da Silva: I do not believe in a capital flight scenario. Quite on the contrary, I see great interest in pre-salt. The production sharing model is used in many important countries with large reserves presenting low risk and high profitability. Also, the interest shown by several international companies for working in the pre-salt in the last few months contradicts this criticism. The definition of a regulatory framework for pre-salt fields proposed by the Brazilian government is the result of careful and patient work. Extensive studies and internal debates taking into account all the factors involved in the economic exploitation of discoveries of this magnitude were carried out.

Some examples are the evaluation of historic precedents in the international scenario, assessment of the technological challenges to be faced, and of the scope of suitable investments for the task at hand.

Among the guiding principles considered for the draft bill was the understanding that this wealth belongs to the whole Brazilian population. We know that pre-salt resources, if well administrated, can be a catalyst for great transformations in Brazil. It is a historic opportunity and to use it well we needed an adequate regulatory structure.

For this reason the production sharing model was chosen. This model prevails in areas with low exploratory risk and great profitability as is the case of the pre-salt. To maintain the previous concession model, appropriate for blocks with great exploratory risk, would be an inexcusable error.

Also, it is necessary to remember that Brazil has respected and will always respect contracts inked in the concession model, including contracts for blocks already tendered in the pre-salt area. The proposed new model applies to the future and this means that Brazil would actually have a mixed model. Pre-salt areas already auctioned regulated by the concession regime and the new pre-salt areas plus some strategic areas regulated by the production sharing model sent to the National Congress.

It is estimated that 80-100 Bbbl of oil may be found in the whole pre-salt area, some 149,000 sq km (57,529 sq mi) off Brazil's southeast coast. Map courtesy of Petrobras.

In the last few years Brazil developed with investors a relationship based on mutual respect. The definition of an appropriate regulatory structure, in face of the new and important discoveries is a new chapter is this relationship, based on clear rules to be debated and approved democratically in a country that has consolidated its democratic institutions.

Offshore: As an associate secretary of the State Department for Latin America, Thomas Shannon, who is the new US ambassador in Brasilia, said that "biofuels, oil, and gas are at the center of attention of the Obama government and its relationship with Brazil. The US is very interested in the Tupi discovery and in other mega fields." Knowing that the US is striving to diminish its dependence of petroleum from the Middle East, we ask: in what stage are negotiations with the US?

President Lula: The questions related to energy are a priority in our bilateral agenda and have been treated by both governments with great perseverance. It is important to remember that during the visit of former President George W. Bush to São Paulo in 2007, the agenda included a visit to the installations of Transpetro, Petrobras' transport subsidiary, where he got acquainted with the logistics of Petrobras' ethanol and biofuels distribution and also with 'flex-fuel' cars technology. With the recent election of President Obama, known for his interest in energy, and above all in renewable energies, this dialogue continued, also because Brazil has a very successful experience in renewable and non-polluting energy sources. Our energy matrix is a living proof of this.

Offshore: Is it viable to exploit pre-salt petroleum when prices of oil are much lower? When the Tupi discovery was announced the prices of oil and of commodities in general were sky-high.

President Lula: The information I have indicates that the response is a clear yes. Pre-salt exploration costs projections are still being detailed, but all information available point to its commercial viability with current or even at lower prices for the barrel of oil in the international market. However, we really make investment plans in energy exploration on the basis of strategic criteria and long range estimates. Considering the non renewable aspect of these reserves, it is reasonable to suppose that prices may rise.

Offshore: We understand that Brazil can only be a member of the Organization of Oil Exporting Countries (OPEC) after becoming a net exporter of petroleum. But we would like to know your opinion, whether Brazil should accept OPEC's invitation. It seemed that the invitation was already rejected because Brazil does not intend to export crude oil but rather to export value added products such as gasoline, etc. But top government officials also said that the invitation is being evaluated. Please clarify.

President Lula: This is not a question to be considered at this time, for the simple reason that the question itself points out. Brazil does not discuss becoming a member of OPEC because it is not a net petroleum exporter and, besides this, it does not intend to export crude oil. Brazil just achieved oil self sufficiency and is now getting ready to explore the pre-salt reserves. Thus, it is too soon to even discuss this matter. I am now working with the idea that Brazil should not be a crude oil exporter. Brazil should build large refineries throughout the country and export oil derivatives with more value added. And, at the right time, if it is necessary, this matter may be discussed again.

I have emphasized on several occasions that one of the ways to generate development from the pre-salt is to add value to crude oil. This is one of the reasons why large volumes of investments have been allocated for expanding the refinery network and the petrochemical sector in Brazil.

Offshore: Will the beginning of production in Tupi mean a leap forward in the position Brazil occupies among the oil and gas producing countries? Petrobras said it aims to become the fifth largest integrated energy company in the world by 2020.

President Lula: Estimates for new discoveries suggest that Brazil will rise to another level as an international producer of oil and gas. There is no doubt about that. It is not yet possible to evaluate how many billion barrels will be added by pre-salt reservoirs to current Brazilian reserves, but these discoveries will certainly turn Brazil into one of the countries with the largest reserves in the world. For now, I believe, we should concentrate in overcoming pre-salt technological challenges and in debating a well-adjusted regulatory frame to make sure this new reality benefits all Brazilians. The government has done its homework and is sure that the proposals sent to the Brazilian Congress are the best way to face the pre-salt challenge.

The strengthening of Petrobras, guaranteed by pre-salt revenues, will help the country to overcome technological challenges in the pre-salt exploration as well as in the diversification of our energy matrix, especially concerning renewable fuels. Our commitments with ethanol and above all with biodiesel are fundamental to transform Petrobras into an integrated energy company capable of meeting the energy and environmental demands of the 21st century.

Offshore: The extraction of petroleum found at 6,000 m (19,685 ft) depth started last May first in Tupi field, Santos basin, will be very meaningful for Brazil's future. How will this development resound in the relationship between Brazil and other Latin American countries?

President Lula: Brazil's development runs side by side with growing integration with our South American neighbors. Thus we give priority to initiatives that enhance political dialogue and economic integration in South America. It is impossible to think of development in Brazil without taking into account the prosperity of our neighbors, and this depends upon alliances nurtured in harmonious ways to fulfill the economic vocation of each country.

The pre-salt exploitation can offer an important contribution for this end. With the new demands created by the exploration of new reserves, related to the production of platform and ships, there is a great potential for new synergies to emerge between Brazil and South America. Not everything will be produced in Brazil. Much of what we will need may be imported from our South American neighbors. I have already invited leaders of neighboring countries to indicate in which industrial sectors they are capable of contributing to meet part of this future demand.

Offshore: Do you agree that the discoveries in the pre-salt layer go way beyond the confirmation of the capacity to produce petroleum and are adding geopolitical weight to Brazil in the international scenario?

President Lula: The questions related to geopolitics involve a series of factors and petroleum is one of them, but I believe that in Brazil's case there are many other achievements that have been recognized by the international community. The democratization of the country, the maturity of our institutions, the stabilization of our economy, the resurgence of development, and advances in combating social inequalities are some examples. We should also include the diplomatic performance, compatible with Brazil's importance as a regional and global player.

The increased importance of petroleum in the Brazilian economy, an accomplishment and the outcome of the investment of the whole Brazilian society, starting with the creation of Petrobras, may be considered another element in this process of self affirmation of the country, both domestic and international. But, by no means, this is the only element of Brazil's domestic and international assertion.

Fortunately, the wealth and diversity of the country offer an ample set of positive elements and initiatives that have characterized Brazil's performance in the international scene. I am sure the increased geopolitical weight that petroleum will add to the country is yet to come. It will come on the day that we demonstrate our capacity as a nation to employ this wealth with intelligence, as for example, by upgrading the educational system and the technological capability of the country.

Sevan Driller, the world's first cylinder-shaped ultra deepwater drilling rig, is due to arrive off Brazil in the fourth quarter for a six-year term with Petrobras. The rig will drill pre-salt exploration wells in the Santos basin. Photo courtesy of Sevan Marine.

On the other hand, we cannot forget the great contribution Brazil gave in the field of renewable energies, which is part of a firm environmental commitment. Brazil's experience in this field points to a way to tackle problems such as climate change. We will continue along this road.

Brazil's energy matrix is one of the most environmentally friendly in the world. Around 85% of the electricity consumed in Brazil is generated by hydropower. Thanks to the contribution of successful programs such as Proalcool (ethanol) and biofuels, 46% of all energy consumed in the country originates from renewable resources, while the international average is of only 11%. The discoveries in the pre-salt will not change this situation. We will not give up our achievements in renewable energy and will continue to expand it due to our own interest and due to the global responsibilities that we assumed in environmental issues.

Offshore: With the strengthening of the Brazilian position in multilateral organizations, what proposals should Brazil put forward to stake out its position in the international arena?

President Lula: Brazil will carry on diplomatic efforts in favor of peace and development. At present, the country is actively working to influence institutions to update and democratize the rules of the international game. Without this effort there is no way to face the challenges of a world increasingly integrated and interdependent, be it in the economy, politics, or environmental questions.

The multilateral political institutions cannot maintain the state of affairs inherited from the post Second World War era. For this reason we defend with such emphasis the need to reform the United Nations and particularly the Security Council.

The economic/financial institutions also do not reflect the realities of today's world and for this reason they cannot offer effective answers in moments of crisis such as the present one. The creation and consolidation of the G-20 with the participation of heavy weight emerging economies such as Brazil, China, and India, already indicate a trend to be followed and the leaders of developed countries recognize this new reality.

Speaking about trade, for example, it is impossible to passively admit the continuity of rules that perpetuate injustices while closing the doors of development for countries that are unable—due to tariffs and all types of barriers—to benefit from their comparative advantages and their agriculture competitiveness. For this reason, we work vigorously in the World Trade Organization, in close cooperation with developing countries to defend the conclusion of the Doha Round multilateral commercial negotiations.

Offshore: Do you consider that the G-20 meetings resulted in a greater opening for the effective participation of countries such as Brazil, China, and India in the decision making process? Could this more intense participation spread to other multilateral organizations? Which?

President Lula: I have no doubts that the G-20 meetings in Washington and London represent a landmark and also the recognition of the importance of countries such as Brazil, China, and India in the debate for overcoming the economic/financial international crisis and about the urgent need to modernize governance mechanisms of international institutions. The G-8 July meeting and the G-8 plus G-5 meeting in Italy, in which Brazil participated, were also important steps, both in the same way, and from these meetings emerged the idea of increasing the G-8 to become the G-14. But this debate is still on going and its practical results in terms of improvements will depend upon the articulation capacity of the emerging nations.

In the first summit of the BRICs (Brazil, Russia, India, and China) that recently took place in Ecaterimburg, Russia, the global crisis was discussed. Statistics show that the BRICs have faced the economic crisis in better conditions than most of the countries, and analysts recognized that these four countries play a fundamental role in the revitalization of the world's economy.

The growing importance of emerging countries must be recognized in the decision making process of multilateral institutions. For this reason during the recent G-20 meeting in London we demanded that developed countries commit themselves with the reform of the voting system and of the institutional quotas of the Bretton Woods system. Only in this way the voice of the developing countries will be heard.

This is only the first step of a modification that we would like to see advancing during the G-20 meeting, scheduled for September, in Pittsburgh, US. Within the G-20, we also defend that in response to the crisis, the Doha Development Round should be concluded quickly.

But the need for changes in the international scenario goes way beyond economy and finances. It is just as urgent to renew the United Nations, if we want multilateral institutions to recover their relevance. To postpone reforms, especially that of the Security Council, will only allow the authority of international institutions to erode more and more.

Offshore: You affirmed that the pre-salt discoveries "give Brazil another chance to repair its historical debt with the poor." How do you intend to insure that the wealth from the pre-salt will not benefit only the national and international elites as it happened in the past during the gold, rubber, and sugar-cane prosperity cycles in Brazil?

President Lula: We will take advantage of the opportunity presented by the pre-salt to benefit Brazil in the best way and above all to help those who depend upon the State. For this reason I have mentioned the historic debt of the country with the poor and the need to increase investments in areas capable of creating opportunities to overcome poverty, with priority to education. In the last few years, income distribution policies and the country's economic growth led 30 million Brazilians to rise from poverty to the middle class, which already amounts to more than half of the population.

This is an important result, but much more needs to be done. The proper exploitation of natural resources such as petroleum in the pre-salt will certainly help the country in this task.

As I said in my speech presenting the new regulatory framework on Aug. 31 in Brasilia, pre-salt is a passport for the future and we do not have the right to make mistakes, nor to waste resources which are essential for a development leap.

When I speak about a passport for the future, I am speaking about the efficient use of a resource which is non-renewable, such as petroleum, to invest in permanent resources like education, scientific, and technological knowledge which have a multiplying effect that we will pass on to present and future generations. For this reason we give emphasis to education, which forms the basis for any important transformation in society and an indispensable tool for any serious developmental project for the country.

Brazil's successful experience in deepwater oil exploration reinforces our optimism about the possibility of overcoming these challenges.

Editor's note: Contributing Editor Peter Howard Wertheim is based in Rio de Janeiro, and can be contacted by e-mail at peterhw@frionline.com.br

According to Manuel Ferreira de Oliveira, Galp Energia's international president, the company's stake in Tupi – the largest find so far with a recoverable reserve estimate of up to 8 Bbbl – is 10%. "With the discoveries already made the reserves belonging to Galp amount to around 1.5 Bbbl," Ferreira says. Galp, based in Portugal, will invest $2.6 billion in Brazil's pre-salt up to 2013.

Out of 24 oil producing countries, 18 have adopted mixed regulatory models that include production sharing and services contracts or production sharing and concession contracts. Only six countries currently work with concession contracts.

The Brazilian government's proposed model includes a production sharing system for pre-salt contracts in which oil companies give part of the oil they produced to the government, replacing the existing concession system in which companies take ownership of whatever oil they discover.

Under the new regulations, Petrobras would operate all blocks and hold 100% interest in some blocks, especially when oil reserves overlap blocks already owned by Petrobras. In areas subject to public bids, Petrobras will hold a 30% minimum interest with the additional right to participate in bidding processes to increase its interest in those areas.

A new public company (Petrosal) would be created to oversee pre-salt contract agreements and the administration of a social fund which would invest in education and in mitigating poverty in Brazil.

In addition, the Brazilian government's draft bills include boosting Petrobras' capital to the equivalent of 5 Bbbl of oil. Source: BP and Petrobras.