Petrobras Faces ANP Call to Up Investment

By Andrew Willis, Contributing Reporter

RIO DE JANEIRO, BRAZIL – Concerned by falling oil production in the Campos Basin off the Rio de Janeiro coast, Magda Chambriard the director of Brazil’s National Oil Agency (ANP) has said she may ask Petrobras, Brazil’s state-directed oil company, to increase investments in up to eleven fields. Petrobras has until the end of this month to produce new development plans for the eleven fields after receiving a warning from the ANP in July.

Fields in the Campos Basin, gradually developed since the late 1960s, account for roughly eighty percent of Brazil’s oil production, but recent years have seen a sharp drop in output.

Production at the Roncador field has fallen by 27 percent, the Marlim Sul field by 65 percent and the Caratinga field by 76 percent, according to the O Globo newspaper.

Chambriard warned Friday (September 14th) that her agency may call for greater investments in the fields in order to buck this trend. “The fall in production is worrying and demands an additional effort … These fields have a production level below what we think is reasonable.”

The Roncador field has a maximum production of 460,000 barrels of oil per day. It reached 358,000 barrels a day in 2008 before sliding to a current production level of 261,000 barrels a day.

Consultant and former director of exploration and production at Petrobras, Wagner Freire, said the fall in production at the Campos Basin suggests that senior management are prioritizing investments at the company’s pre-salt oilfields.

Announced in 2007 with much fanfare, the pre-salt oil fields are so called because the oil lies in the seabed beneath a thick layer of salt. Standard offshore oil reservoirs are found above the salt layer, or post-salt.

“These falls [in production] show that there is a poor management of resources,” said Freire. “The pre-salt assessment was preemptive and, as well as interrupting new auctions (bidding rounds), is already affecting the production of post-salt areas.”

For Chambriard’s part however, the ANP does not believe that Petrobras is prioritizing the development of pre-salt areas.

“The development of pre-salt [fields] has to be paid for by what is produced from the post-salt [fields],” she said. “I’ve never seen anyone give up revenue. When I see a field like Marlim producing only 200,000 barrels per day and a 41-year old field in Norway in full production I’m sad.”

Oil typically flows freely from a well during the primary oil recovery stage, after which pressure inside the reservoir drops. At this point oil companies frequently inject water or gas into the reservoir in order to restart the flow, a strategy that Petrobras may have to increase if it is to meet the ANP’s production demands.

The injection of water or gas comes at a coast, however, with Petrobras currently struggling under the weight of expensive diesel and gasoline imports and its first quarterly loss in over a decade.