Magda Chambriard, General Director of Brazil’s National Petroleum, Gas, and Biofuel Agency (known as ANP), recently outlined the major challenges facing the country’s campaign to expand oil and gas production and take advantage of the enormous “pre-salt” off shore, ultra-deepwater reserviors. According to Chambriard, Brazil can double its booked reserves in the near future, from 15 to 30 billion boe, but that such a goal is dependent upon ANP’s capacity to regulate, contract with national and international companies through administering the bidding rounds for future exploration, and monitoring and supervision of an increasing number of firms involved with exploration and production along with other federal and state government agencies. Chambriard reported that 39 national companies and 39 foreign headquarted firms are currently under concession contracts for exploration and production, together producing 2.2 million bbl/day of oil and 65.9 million m3/day of gas. While the General Director of ANP outlined the local content strategy, she also pointed out that there are plenty of opportunity for foreign equipment suppliers. Pointing to a 2010 Booz and Company report, she reported that foreign suppliers dominant the markets for turbo generators, centrifugal compressors, flare, sulfate removal units, gas motors, and gas reciprical compressors. Indeed, Brazilian companies only dominate the supply markets for heat exchangers, screw type air compressors, and rotary pumps.
Chambriard assessment of the challenges include: the mounting demand for goods and services needed to increase production, the technologial challenges of ultra-deepwater drilling, making the local content policy work for both production and national development, and encouraging sufficient research and development investment policies. She points to the federal government’s REPETRO tax incentive policy aimed at stimulating greater investment in the national shipyard industry for drilling rig construction and the REPORTO tax incentive policy for port and railway expansion and modernization. Also, Chambriard forecasts that oil and gas companies, led overwelmingly by Petrobras, will have invested over $2 billion (USD) in oil and gas related research and development next year and reach a cumulative level of $8.89 billion by 2020.
The General Director of ANP also reported that her agency’s regulatory activities are also expanding to meet the safety challenges facing the rapid expansion of oil and gas production in Brazil. During the 2010/2011 period, she reported that ANP conducted 130 audits, filed 910 non-conformity reports, assessed $23 million (USD) in fines, and halted production through precautionary measures on 14 separate occasions. Moreover, she noted that ANP’s human resource capacity has been improved with a commitment to “onboard” supervision to improve the administration of precautionary measures to improve safety compliance and reduce fines. In the future, Chambriard seeks to cultivate a “safety culture” and formulate and administer more effective risk acceptance criteria for regulating and supervising the industry. Read the full presentation here.
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