Page 5 - LatAmOil Week 28 2022

LatAmOil COMMENTARY LatAmOil

Nevertheless, Laercio Oliveira, a member of the strategy hinges on offshore upstream projects,
Solidariedade Party and legislator representing especially deepwater and ultra-deepwater fields
Sergipe State in the lower house of the National in the pre-salt zone of Brazil’s offshore sector. In
Congress, is working to draw up a bill designed other words, the company sees the pre-salt zone,
to encourage offshore gas producers to make which already accounts for the majority of its
their output available for sale on the domestic hydrocarbon output, as its future.
market rather than re-injecting it. It may therefore object to legislation that
Oliveira told Argus Media in an interview restricts or disincentivises gas re-injection, as
published earlier this week that he saw this leg- it will probably see this practice as crucial to
islation as necessary because of the changes that maintaining reservoir pressure in the offshore
have occurred in the gas market over the last fields that serve as the pillars of its development
year. He mentioned global factors such as con- strategy.
tinuing fallout from the coronavirus (COVID-
19) pandemic, Russia’s invasion of Ukraine and CCUS and other solutions
higher LNG prices but also noted that Brazil was As such, Oliveira ought to delve more deeply
being affected by events closer to home such into the issue of how to reconcile his policy aims
as the reduction in deliveries of Bolivian gas. (namely, bringing gas to shore rather than let-
Under these circumstances, he said, the country ting it be loaded back into a subsea reservoir)
ought to maximise domestic gas production. with Petrobras’ business goals (namely, keeping
In his interview with Argus Media, Oliveira production levels up over the long term). One
indicated that his plan for beefing up produc- way to do this might be to take a closer look at
tion by reducing re-injection would mostly carbon capture, utilisation and storage (CCUS) Oliveira ought to
involve using administrative measures to create technologies.
incentives for producers. This is not the place to Petrobras has already taken a strong interest delve more deeply
rehash that interview, but suffice to say, most of in CCUS solutions and regularly describes its
the features he mentioned were related to taxes, offshore upstream operations as closer to car- into the issue of
tariffs, regulatory authority, mechanisms for bon-neutral than comparable offshore projects
establishing pipeline networks and such. in other regions. Its reasons for doing so are not how to reconcile
It is too early to say whether this initiative will purely altruistic but practical, as much of the gas his policy aims
succeed or fail, as no formal bill has been drafted found in fields targeted for development has a
or submitted for discussion in the National Con- high carbon dioxide content. with Petrobras’
gress. And certainly, Oliveira seems to under- Likewise, its actions on this front have been
stand that his original plan is likely to undergo concrete rather than theoretical. In January business goals
some changes in the legislative process. He of this year, for example, it began contracting
indicated to Argus Media that he was still seek- suppliers to design, construct, install and test
ing input from stakeholders, saying that he HISEP, its patented technology for separating
wanted more feedback so that he could be sure and re-injecting gas with high carbon dioxide
that whatever legislation was put forward was contract. The NOC believes HISEP to have an
acceptable to gas market participants. advantage over most gas-handling solutions, in
It is crucial for the National Congress to that it can be installed on the seabed and thus
hear from stakeholders, he added. “We need to has a lower profile and takes up less space than a
understand the reasons that make the producer topsides processing plant.
choose to re-inject part of the gas produced and Could Oliveira then bridge the gap between
create conditions to invert this business logic, his policy goals and Petrobras’ business develop-
always paying attention to technical issues,” he ment targets by focusing on CCUS technology?
said. That is, what if legislators sought to encourage
gas producers to send more of their output to
Petrobras’ plans shore by making it easier for them to access
Based on what Oliveira said in the interview, CCUS solutions – or even other, lower-tech
NewsBase believes that this understanding is not solutions such as water injection – that could
present yet – and that it is unlikely to develop serve as an alternative and leave the gas available
unless MPs take certain factors into account. for domestic consumption?
One of these factors is the business develop- This could happen, if Oliveira hears the right
ment strategy being followed by Brazil’s national kind of suggestions from stakeholders. But it
oil company (NOC) Petrobras. The NOC is might not, if he confines himself to talk about
majority-owned by the state but has consider- taxes and tariffs. ™
able leeway to set its own course with respect to
certain business matters, including the setting of
priorities for future strategic development and
the pricing of petroleum products. This inde-
pendence, which is guaranteed under Brazil’s
constitution, puts Petrobras at loggerheads with
the Brazilian government whenever the latter
is in a position of wanting to put the country’s
largest taxpayer to work for the benefit of the
federal budget.
Currently, Petrobras’ long-term business

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