Petrobras, in response to an article in the O Globo newspaper that stated the oil price collapse is threatening presalt, has clarified in a press release that it is expanding its oil and natural gas production capacity in the Brazilian presalt layer in an economically viable manner. The company said that the breakeven price (the minimum oil price at which production is economically viable) planned at the moment when its presalt production projects were approved was around $45/bbl, including taxes and not including natural gas transportation infrastructure spending. Inclusion of the latter spending may raise the total figure by $5/bbl to $7/bbl.

In addition, the stated breakeven price assumes a well flow of between 15 Mbbl/d and 25 Mbbl/d. Petrobras is currently producing average flows of 20 Mbbl/d in the presalt layer. Some wells in the Santos Basin presalt cluster have attained flows of more than 30 Mbbl/d, making projects more economical. For example, this high productivity has enabled the pilot production units of the FPSO Cidade de São Paulo in Sapinhoá Field and FPSO Cidade de Paraty in Lula Field to reach their maximum production capacity, of 120 Mbbl/d, using just four production wells connected to each one.

This calculation presumes that all the projects’ expenditure (investment, operating costs and taxes) is associated with the price level of inputs prevailing at the time the projects were approved. Petrobras highlighted in the press release, however, that the costs of goods and services suppliers have historically been correlated with oil prices in the international market. When there is a significant decline as in the current case of the oil price level, this is accompanied, not always immediately, by a fall in costs in relevant parts of the goods and services sector. The effect of this reduction partially offsets the loss of revenue caused by the drop in oil prices.