As the dust settles following the media frenzy that surrounded the confirmation in Brazil’s first pre-salt bidding round of the winning consortium to develop the giant Libra field, those winners are now busy contemplating the size of the task ahead of them – including a forecast total investment of up to US $180 billion over the life of the agreement.

Petrobras and its partners Shell, Total and China’s CNOOC Ltd. and China National Petroleum Corp. were the companies that pledged to the Brazilian government a minimum 41.65% of profit oil. But profits there should eventually be, especially as at its peak the field is forecast to be able to produce up to 1.4 MMb/d, according to the National Petroleum Agency (ANP). The ANP puts recoverable reserves currently at between 8-12 Bbbl, with the field lying in water depths of around 2,000 m (6,500 ft).

According to the ANP’s director-general, Magda Chambriard: “We couldn’t have attained a scenario that would be more successful than this one,” adding that the capabilities of the companies “leave nothing to be desired”.

That upbeat message was echoed throughout the OTC Brasil event in Rio – where Libra was literally the talk of the town – with Petrobras chief executive Maria das Gracas Foster telling delegates in one session: “In 2017, Libra will start to become a material aspect of our capital expenditure.” By that year, she said, Petrobras will add 750,000 b/d to its production capacity, and will double its current output to 4.2 MMboe/d by 2020. “Between 2020 and 2023, we will see Petrobras and our consortium partners ramping up production on Libra,” she continued.

Jose Miranda Formigli, Petrobras’ E&P Director, commented on the importance of the company’s consortium partners in another session: “We believe that the technical expertise that they will bring for subsurface issues will be extremely important for the Libra development. All these companies have quite a lot of experience in implementing mega-projects.
“But we will need to balance the exploration and appraisal period with the time for first oil, and to reach that, we have the right information management – which means we have to share the right information within the consortium.”

He added that the partners should “in the near future” be announcing data on specific targets and first oil for Libra, although the current forecast start for production is pencilled in for 2020. That production is likely to flow through anywhere between 10-15 separate but largely replicated floating production systems in a phased module approach, similar to the operator’s giant Lula field, meaning an initial approach to the market should be underway before the end of 2014, DI hears.

In more detail, the actual Libra award saw Petrobras put in for an extra 10% on top of its guaranteed 30% participation, along with Shell (20%), Total (20%), CNPC (10%) and CNOOC (10%). The contract for the block will be under a 35-year production sharing framework in accordance with law no. 12,351, which authorises the exploration and production of oil and gas in the pre-salt and other strategic areas. The PSC is expected to be signed during November.

The 41.65% profit oil relates to the surplus in oil to be paid under a reference scenario of an oil price between $100.01 and $120.00 per barrel of oil and production per active producing well of between 10,000-12,000 b/d. This percentage will vary in accordance to international oil price and well productivity.

The consortium is paying a signature bonus of R$15 billion (US $6.7 billion) for Libra’s rights, with the first exploration phase to cover four years. The minimum exploratory program to be carried out in that period will include 3D seismic for the whole block, two exploration wells and one extended well test.

For the exploration phase the minimum percentage of overall local content is 37%, in the development stage it rises to 55% for systems with first oil until 2021, and 59% for those after 2022.

The Libra block lies in the ultra-deep Santos Basin in the pre-salt area, covering 1,548 sq km, and was discovered by well 2-ANP-0002ARJS in 2010.

Petrobras says that recoverable oil volume estimates, costs, investments and a schedule for the production systems “will be progressively released in a timely manner, as the minimum exploration program is developed”.

The Brazilian company, which is currently pumping 330,000 b/d of oil from its pre-salt assets, believes Libra is one of the most promising accumulations in the pre-salt area.

The government’s total take from the field, including taxes, will eventually be about 80%, one of the highest rates in the world, according to the ANP’s Chambriard. The ANP does not, however, expect another pre-salt bid round in 2014, though a 13th offshore licensing round is a possibility, she said.

Brazil’s Finance Minister Guido Mantega also recently said that between 2014 and 2025, around $80 billion is likely to be invested to develop and exploit the Libra deposit.