Total and Petrobras Sign Assets Deal

Total

By MarEx 2016-12-21 16:39:25

Total and Petrobras have signed an assets package agreement in the framework of their Strategic Alliance announced in October 2016. 

The agreement reinforces the joint partnership and cooperation between the two companies, in the upstream and downstream sectors, covering operations, research and technology.

Upstream, the technical cooperation will include joint assessment of the exploration potential in key prospective areas in Brazil and the development of new technologies.

Total will also become partner to Petrobras in two high-quality pre-salt licenses of the prolific Santos basin: the BMS-11 with the Iara fields currently under development where Total will acquire a 22.5 percent interest from Petrobras, and in the BMS-9 with the Lapa field which just entered into production and where Total will become the operator of the license with the acquisition of a 35 percent interest from Petrobras. 

The two companies will combine their expertise in deepwater to jointly develop solutions for long subsea tie-backs, reservoirs with high CO2 content and digital geosciences data management. Total will also offer to Petrobras the option of taking a 20 percent stake in the Perdido Belt deepwater exploration Block 2 recently awarded in Mexico.

Downstream, Total will enter the integrated gas and power market in Brazil. Total will acquire from Petrobras some regasification capacity in the Bahia LNG terminal and a 50 percent interest in two co-generation plants located in the Bahia area as well as pipeline transport capacity, enabling Total to supply gas to the two co-generation plants.

Under the terms of this assets package deal, the acquisition of the upstream and downstream interests in Brazil from Petrobras will represent a global value of around $2.2 billion.

Commenting on the deal, Wood Mackenzie analyst Dr Valentina Kretzschmar said: "Following a period of deep cuts, which helped bring down Total’s cash flow breakevens to a sustainable level, the company is now shifting its strategy towards more aggressive business development.

"A rebound in oil prices, combined with a new phase of strong cash flow growth, will fuel Total’s new business development opportunities. Pre-salt deepwater Brazil offers access to low-cost, long-life resources, and will help shift Total's portfolio to the lower end of the cost curve - in line with the company's strategy."

Currently, Petrobras and Total jointly participate in 15 consortiums worldwide in exploration and production, nine of which are located in Brazil and six abroad. In Brazil, the companies are partners in the development of the giant Libra field which is the first production sharing contract in the Brazilian pre-salt Santos basin. 

Outside Brazil, Petrobras and Total are partners on the Chinook field in the U.S. 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.