The Federal Government will receive R$ 847 million from the BM-S-9 consortium, referring to the Sapinhoá Field, a major oil and natural gas producer in the Santos Basin. The payment, which is unprecedented, is the result of a financial conciliation made by Pre-Sal Petróleo with the consortium led by Petrobras (45%) and the non-operating partners Shell (30%) and Repsol Sinopec (25%), denominated Equalization of Expenditures and Volumes (EGV - Equalização de Gastos e Volumes). The funds will enter the Single Account of the National Treasury on the 21^st.

The EGV is the result of the Production Unitization Agreement (AIP - Acordo de Individualização da Produção) performed in the Sapinhoá Shared Reservoir. The consortium started production in 2010 and shortly thereafter identified that the oil field exceeded the geographical boundary of the BM-S-9 Block contract, extending towards a non-contracted area. In such cases, by means of an AIP, the Federal Government, represented by Pré-Sal Petróleo, will be entitled to a share of the production and equivalent responsibility over the expenses. In Sapinhoá, it was agreed between the parties that 3.7% of production corresponded to the non-contracted area and was thus owned by the Federal Government. A balance of accounts was made considering the revenues from the beginning of production and, in the same proportion, the investments and expenses of the period. This conciliation resulted in the credit balance of R$ 847 million.

"Our role is to represent the Federal Government in the AIPs and act so that the participation is entered into by agreement. Our geoscience and reservoir engineering teams conduct studies to determine the share of the Union in the production of the deposit. We always work to ensure a fair share for the Federal Government. We are very pleased with the result of this work”, explained Ibsen Flores Lima, president of the company.

To date, Pré-Sal Petróleo has already signed six Production Unitization Agreements. In addition to Sapinhoá, the Federal Government has also signed the AIPs for Tartaruga Verde, Lula/Sul de Lula, Nautilus, Atapu and Brava. The company also expects to sign the Production Unitization Agreement for the Mero Shared Deposit. There are still 17 other potential cases of unitization of the production under analysis by the company.

"We are in negotiation with the consortiums and soon we will have new results. It is meticulous work done in parallel with other fronts of the company's operations. In 2018, adding the result of the EGV of Sapinhoá with the beginning of the marketing of the Federal Government's oil, also the responsibility of Pré-Sal Petróleo, we closed the year generating revenues of R$ 1.1 billion for the Federal Government. By 2019, we expect to close the EGVs of Lula and Tartaruga Verde, guaranteeing the entry of new resources, as well as obtaining positive results with the marketing of oil and gas from these fields. From now on, the potential for the generation of revenue for the Federal Government is growing”, explained Flores Lima.

In addition to representing the Federal Government in the AIPs, Pré-Sal Petróleo manages the production sharing contracts and is responsible for the marketing of the Federal Government's oil and gas. The company closes 2018 with a portfolio of projects of 14 Production Sharing Contracts and an estimated amount of R$ 3.2 billion already guaranteed in contracts for the purchase and sale of oil from the Federal Government. A study recently released by the company indicated that in 2028, the Federal Government will be entitled to an estimated production of 250,000 barrels of oil per day related to the production of these 14 productions sharing contracts, generating an estimated annual revenue of R$ 20 billion for the Federal Government.

Support material

What is a Production Unitization Agreement?

Whenever the boundary of an oil field surpasses the area of a contract, expanding beyond established boundaries, it is necessary to make a Production Unitization Agreement, also called Unitization. Originating in the United States, these procedures are adopted around the world, avoiding the non-optimized production of the deposit, establishing the apportionment of costs between the holders of rights over the areas and optimizing the investments.

After the AIP has been approved by the National Petroleum Agency, a financial reconciliation is needed between revenue and expenditure incurred prior to the approval of the ANP, and this process is called the Equalization of Expenditures and Volumes (EGV). In case the limits of the deposit extend to non-contracted areas in the pre-salt area, PPSA is the representative of the Federal in these agreements.

Production Unitization Agreements (AIP) Signed Shared Deposit of the Tartaruga Verde Field

The Tartaruga Verde Field is in the Campos Basin, 127 kilometers off the coast of the state of Rio de Janeiro. The Field is operated by Petrobras under concession and one of its deposits extends to the southwest, to a non-contracted area. It was the first AIP made by Pré-Sal Petróleo, establishing the Shared Deposit of the Tartaruga Verde Field. The agreement was signed on October 31, 2014 and executed on March 1, 2018, granting the Federal Government a 30.65% stake in the shared deposit.

Lula/Sul de Lula Shared Deposit

The Lula Field is the main producer of oil and natural gas in the pre-salt reservoirs. Located in the Santos Basin, the field is operated by Petrobras (65%) and Shell (25%) and Petrogal (10%) as non-operators. The AIP negotiations began in July 2014 and the agreement was signed in August 2015. The AIP is not yet effective, pending approval from the ANP.

Sapinhoá Shared Deposit

The Sapinhoá Field is an important producer of oil and natural gas. Located in the Santos Basin, it is operated by Petrobras (45%) with non-operators Shell (30%) and Repsol Sinopec (25%). The AIP negotiations began in September 2014. The agreement was signed on January 31, 2016 and became effective, after approval by the ANP, in November 2018. The AIP established that the fraction of the Federal Government in the shared deposit would be of 3,7%. Following the signing of the Production Sharing Agreement of Entorno de Sapinhoá, on 01/31/2018, this participation belongs to the consortium of this agreement, composed of the same companies of the Sapinhoá consortium and having the PPSA in the role of manager.

Nautilus Shared Deposit

Nautilus is part of the BC-10 concession contract in the Campos Basin, where Shell is the operator (50%) and ONGC (27%) and QPI (23%) are partners. Negotiations for this AIP were initiated in December 2014, and the agreement was submitted to the ANP in November 2015. The AIP has been effective since October 2017, where the Union holds a 7.6% fraction in the shared deposit.