Getting this task done will not be a short-term job because of the ongoing ramifi cations of Operação Lava Jato (Operation Carwash), the corruption scandal that has rocked Petrobras and the country’s whole economy to their very cores.

But while Petrobras continues to wade through the scandal—while also dealing with its shrunken stock price and a massive credit crunch—business is still being done in Brazil. In addition, several of its world-class projects are still progressing to plan. It remains, after all, one of the offshore world’s largest sources of recoverable oil reserves to help meet long-term energy demand, and it represents a long-term prize. As such, many companies understand they must show faith in the country’s judicial system in order to eventually reap the rewards.

First things fi rst, however. The Petrobras scandal represents bribery and corruption on a massive scale, has destabilized the government and has tipped the economy into recession. This, in turn, has stalled the country’s previously powerful upward surge toward the top tier of booming economic powerhouses like China, India and Russia.

Kickbacks
The investigation into the system of kickbacks, which are linked directly to some of the main political parties (six so far), has involved the issuance of 117 indictments, the arrests of fi ve politicians and criminal cases brought against 13 companies. The total amount of bribes is estimated to be nearly $3 billion, and that is a conservative estimate.

Oil, however, remains central to Brazil’s future, and Petrobras will remain key to its successful exploitation.

It is still one of the world’s largest oil companies and retains a pioneering reputation for technological innovation in the offshore sector. The scandal has not changed the engineering and technical skills that reside within the company.

Petrobras’s new CEO, Aldemir Bendine, took over in February and has installed plenty of new faces in the upper ranks as part of the company’s campaign to ensure the circumstances that led to systematic corruption do not happen again. He also has started the process of potentially selling assets valued at more than $50 billion, tackling a massive debt burden of more than $130 billion (the largest in the energy industry) and increasing the company’s oil production.

Crown jewels
That last part is where the upstream industry can start to take heart once more, especially as Bendine has expressed a clear intention not to sell off the company’s “crown jewels,”meaning its stakes in the country’s presalt fi elds. But he is planning to sell off exploration assets and mature producing fields, according to a recent interview with the New
York Times.

That will leave the door open for other majors that have long had an eye on increasing their Brazilian portfolios. The process has already started with the sale of 20% of Petrobras’s stake in the deepwater Bijupirá and Salema fields, currently operated by Shell. Those fields lie in the Campos Basin with production averaging 22,000 bbl/d of light oil and 325 Mcm/d (11.5 MMcf/d) of associated gas.

Shell is considering investing billions in Brazil as part of its planned acquisition of the BG Group. The BG deal will make Shell the largest foreign investor in Brazil’s deepwater fi elds, and it is reported to have up to $5 billion penciled in for eventual new acquisitions. Shell has long shown interest in Petrobras’ producing oil fi elds as well as operating rights in the country’s presalt basin.

Shell and BG’s combined oil production in Brazil is expected to hit 550,000 bbl/d by the end of the decade from approximately 200,000 bbl/d presently. That will represent about 20% of the company’s global production. BG’s production in Brazil more than doubled in second-quarter 2015 to an average of 143,000 bbl/d.

Libra test
While not quite “business as usual,” Brazil’s offshore activity continues to tick along satisfactorily. The fi rst oil output from a long-duration test on the giant Libra Field will fl ow in fi rst-quarter 2017, according to Odebrecht Oil & Gas, which is later than the original forecast by Petrobras of the latter part of 2016. Libra is one of the world’s largest oil discoveries of recent times and has Shell, Total, CNOOC Ltd. and China National Petroleum Co. as partners. Libra contains an estimated 8 Bboe to 12 Bboe of recoverable reserves.

BG also recently confi rmed the start of production from the Cidade de Itaguaí FPSO vessel, the sixth unit to begin production across the group’s discoveries in the Santos Basin. The FPSO vessel will produce from the Iracema North area of the Lula Field in Petrobras-operated Block BM-S-11.

Located approximately 240 km (149 miles) offshore, the FPSO vessel sits in about 2,220 m (7,284 ft) of water and is the second leased fl oater deployed on Iracema. It will help double gross production to 300,000 bbl/d of oil and 16 MMcm/d (565 MMcf/d) of gas from the area.

Subsea trees
Brazil will still represent a major slice of the global subsea tree market going forward, with the country comprising about 90% of future installations in Latin America. Its deepwater and ultradeepwater presalt and post-salt developments such as Lula, Buzios and Iracema will remain key drivers for the region.

Although the corruption scandal has seen some contracts suspended and deliveries delayed, which could in turn result in a knock-on effect in terms of the installation of subsea trees, analyst Infi eld Systems still expects Latin America (almost entirely Brazil) to represent the largest share of global tree installations with a 35% slice. The most capital-intensive development is expected to be Lula Central.

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Petrobras Business Plan

Petrobras will cut its spending in the period from 2015 to 2019 to its lowest level in eight years, investing $130.3 billion. That  gure is 41% less than the $221 billion planned in the previous  ve-year plan from 2014 to 2018.

The plan prioritizes E&P projects in Brazil focused on the presalt. New production systems are estimated to total $64.4 billion, with 91% of that amount for presalt projects. In its other business areas spending will largely be limited to maintaining operations and for projects related to of oading oil and gas.

Of its total E&P investments, Petrobras said 86% will be allocated to production development, 11% to exploration and 3% to operational support. Exploration activities in Brazil will be concentrated on meeting only the minimum exploratory program for each block.

The company expects to achieve total production of oil and gas (Brazil and international) of 3.7 MMbbl/d in the year 2020 and estimates that by then the presalt will represent more than 50% of total oil output. The gas and power area has been allocated $6.3 billion, primarily for the construction of pipelines and processing units to treat gas from the presalt.

The amount of divestments from 2015 to 2016 was recently revised to $15.1 billion (of which 30% comes from the E&P area, 30% from the downstream area and 40% from the gas and power area). The plan also anticipates additional efforts in the restructuring of businesses, demobilizing of assets and additional divestments, totaling $42.6 billion from 2017 to 2018.