Granting Documents Upstream Contract Models with Governments For IGU Rio de Janeiro 2013 Adauto Carneiro Pereira PETROBRAS
What Governments and Investors are expecting out of upstream Contracts? INVESTOR GOALS: Maximum economical development of hydrocarbons reserves; Be compensated by risks taken; GOVERMENT GOALS Maximum use of petroleum resources of the country; Keep control of petroleum activities.
Contracts with Governments: Minimum requirement by investors Be compensate by risks taken; Exclusive exploration and production rights on the block; Sole discretion on economic viability beyond minimal exploration commitment;
Contracts with Governments: Minimum requirement by investors Marketing of petroleum production at international market price; Right to keep proceeds from production exportation abroad; Fiscal and Economic stability. For Gas Production in general it is sold at domestic market condition, in case there is no volume to economically justify a LNG Plant. For onshore Joint Ventures it is usual to have a Gas Balance Agreement, for adjustment among partners due to lack of market for one or more partner.
Most Commum Contratc Models Between Government and Companies for petroleum exploration and production: Production Sharing (PSA or PSC) Concession (Tax and Royalties) Service Buy-Back (only in Iran) Transfer of Rights Agreement (only in Brazil)
Concession Contracts The Concession Contracts is a way to make the high risk upstream economic activity closer to the other economic activities from the fiscal standpoint. All expenses (development investments, operating cost, etc.) are made directly by the investor, with no part of revenue reserved for cost recovery. All operating assets (rigs, FPSOS, etc.) are owned by the investor, and shall be taken away after the contract termination.
Production Sharing Contracts A certain percentage of the gross revenue is allocated for Cost Recovery. The remain is shared between Government and IOC as Profit Oil, following contractual specifications. All recognized expenses shall be recovered through the Cost Oil. In other word, the IOC will be expending Government money, for which it shall be reimbursed during production phase. The IOC may be subjected to some form of taxation from its share of the Profit Oil. In most of the countries there royalties are charged before the Cost Oil and Profit Oil calculations. The royaltie them function as a minimum government take. All goods subject to Cost Recovery will belong to the government at the end of the Contract.
Service Contracts They are characterized by a negotiated mark up upon all expenses. There is no additional gain as a result of better reservoir performance due to technology applied or additional reserves discovered. Examples: Mexican Service Contract Buy Back in Iran Venezuelan Service Contract
Concession Contracts (2010) Canadá E.U.A. EUA Reino Unido Portugal Romênia Turquia Rússia Casaquistão Cazaquistão Colômbia Peru Brasil Brasil Nova Guiné Argentina Namíbia África do Sul Austrália
Production Sharing Contracts (2010) Rússia Argélia Líbia Turquia Casaquistão Cazaquistão Mongólia Paquistão \ China Arábia Saudita Índia Equador Nigéria Indonésia Malásia Angola Tanzânia
Both Contracts (2010) Rússia Casaquistão Cazaquistão Senegal Argélia Níger Paquistão Nigéria Camarões Brunei
Service Contracts (2010) Irã México Irã Filipinas Bolívia
ANGOLA - PSC NO ROYALTIES GR GROSS REVENUE COST RECOVERY: FROM 50% TO 65% PROFIT OIL DEV OP EXPL GOV COMPANY PROFIT IR: 50% In this order! COST RECOVERY DEV DEVELOPMENT (Uplift 50%) OP OPERATING EXPL EXPLORATION GOVERNMENT TAKE IR INCOME TAX PROFIT SHARING RATE OF RETURN (%) CONTRACTOR S PROFIT SHARE (%) 0-15 80 15-25 60 GOV. GOVERNMENT SHARE 25-30 40 SIGNATURE BONUS NOT RECOVERABLE >30 20
Mozambique PSC IOC PROFIT OIL NET REVENU GOV R Factor IOC até 1.0 90% 1.0-1.5 85% 1.5-2.0 75% 2.0-2.5 60% > 2.5 50% GROSS REVENUE Recovery Ceiling CAPEX + OPEX Cost Recovery Water Deoth Maximun up to 500m 65% 500m-1000m 75% deeper than 1.000 85% Royalty Royalty hidrocarbon tax Oil 8% Gas 5% ENH carried in 15%during Exploration INCOME TAX: 32%
Nigéria - PSC ROY GR = GROSS REVENUE NR Net Revenue Cost Oil ceiling: 80% of NR CAP NCAP OPEX ECO ROY Royalty 8% P1 ITA OPEX Op.Costs NCAP NCap.Costs 80% of Appraisal and Development Wells CAP Cap.Costs (Pre-prod Capex + Facilities + 20% of Development Wells) depreciated in 5 years Profit Oil Split R - Factor R < 1.2 1.2 < R < 2.5 R > 2.5 Contractor Share 70% 25% + 55%* (2.5-R)/1,3 25% PPT=50%x P1 Bonus Production At 220 MM bbl 50 MM US$ At 500 MM bbl 50 MM US$ CAPEX Invest. Costs PPT Petroleum Profit Tax ABD Aband. Costs ECO Excess Cost Oil Profit Oil Contractor Profit ITA Investment Tax Allowance NNPC 50% of Capital Cost
Adauto Carneiro Pereira Petrobras (21) 3224-0072 adautop@petrobras.com.br The End