Total, Petrobras in $2.2 billion deals

The move creates a new partnerships in the upstream and downstream sectors.

Petrobras and Total have signed deals worth US$2.2 billion which will see Total take stakes in a number of Brazilian offshore fields and an onshore plant.

Petrobras has agreed to give Total 22.5% in the Iara concession area, containing the Sururu, Berbigão and Oeste de Atapu fields, which are under unitization with the Entorno de Iara, a transfer of rights area in which Petrobras holds 100% interest) in the Block BM-S-11. Petrobras will remain as operator with 42.5% interest.

Petrobras will also transfer 35% interest in the Lapa field concession area to Total, in Block BM-S-9, with Total taking operatorship, leaving Petrobras with a 10% interest.

The Lapa field has been put in production since December 2016. "Total will manage the next phases of the challenging development of the Lapa field as it presents distinct characteristics from other pre-salt fields," says Total.

Petrobras will also transfer 50% interest in two onshore cogeneration plants, Rômulo de Almeida and Celso Furtado, in Bahia area, to Total. The two plants are connected to the regasification terminal located in São Francisco do Conde, also in Bahia, where Total will take regasification capacity to supply gas to the power plants.

The moves follow a strategic alliance signed by the two firms in December last year. Under the alliance, Total had already given Petrobras an option to purchase 20% interest in Block 2 of the Perdido Foldbelt area, in the Mexican sector of the Gulf of Mexico, agreed joint exploration studies with Petrobras in the exploratory areas of Equatorial Margin and in Santos Basin, and agreed a technological partnership in the areas of digital petrophysics, geological processing and subsea production systems

"The partnership with Total will allow Petrobras to reduce its investment and benefit from technological solutions that will be jointly studied between Petrobras and total, maximizing profitability and the volume of oil to be recovered," says Total.

Currently, Petrobras and Total are jointly participating in 15 exploration and production consortiums, nine of which are in Brazil and six abroad.

In Brazil, the companies are partners in the development of the giant Libra area, which is the first production sharing contract in the Brazilian pre-salt in Santos basin. Start-up at the Libra Pilot project is anticipated in 2H 2020, however, to meet this expectation, the Libra consortium needs to hire the FPSO by Q1 2017.Petrobras recently relaunched the FPSO bid process earlier this month.

Outside Brazil, Petrobras and Total are partners on the Chinook field in the US Gulf of Mexico, on the deepwater Akpo field in Nigeria and on the gas fields of San Alberto and San Antonio/Itau in Bolivia, as well as in the Bolivia-Brazil gas pipeline.

BG E&P Brasil, a Royal Dutch Shell subsidiary, with 25% and Petrogal Brasil, with 10%, also take part in the Iara consortium. The other partners in Lapa are BG E&P Brasil, a Royal Dutch Shell subsidiary, with 30% and Repsol-Sinopec Brasil , with 25%.

Pedro Parente, CEO of Petrobras and Patrick Pouyanné, Chairman and CEO of Total, said in a statement: “These new partnerships together with a reinforced technological cooperation should create significant synergies and values, mutualizing our operational excellence and further reducing costs on our joint projects for the benefit of both companies”.

Total will pay to Petrobras $2.2 billion, comprising $1.67 billion cash for assets and services, $400 million that can be triggered to carry a part of Petrobras’s investment share in the Iara development fields and $150 million as contingent payments.

The agreements are subject to approvals by the relevant regulatory entities and other conditions.