Petrobras signs LOI for FPSO pilot on Tupi Northeast

Petroleo Brasileiro SA (Petrobras) signed a letter of intent with SBM Offshore NV and Queiroz Galvao Oleo e Gas SA (QGOG) for the charter and operation of a floating production, storage, and offloading vessel for a pilot project the will produce from the presalt layer in the Tupi Northeast area, Santos basin Block BM-S-11, about 265 km off Brazil.

June 3, 2010

2 min read

By OGJ editors
HOUSTON, June 3 -- Petroleo Brasileiro SA (Petrobras) signed a letter of intent with SBM Offshore NV and Queiroz Galvao Oleo e Gas SA (QGOG) for the charter and operation of a floating production, storage, and offloading vessel for a pilot project the will produce from the presalt layer in the Tupi Northeast area, Santos basin Block BM-S-11, about 265 km off Brazil.

Tupi Northeast lies in 2,100 m of water.

SBM said the FPSO will include topsides facilities to process 150,000 b/d of production fluids, associated gas treatment for 5 million cu m/d with compression and carbon dioxide removal, and a 150,000 b/d water injection facility.

The undiscounted value of revenues from the FPSO contract will be about $3.75 billion, according to SBM.

SBM noted that it is its intention to own and operate the unit in a consortium of SBM affiliated companies that include QGOG, Nippon Yusen Kabushiki Kaisha, and ITOCHU Corp. SBM expects its share in the consortium to be 44.4-50.5%, depending on financing alternatives.

Petrobras clarified that SBM's estimate of the contract value refers to the sum of the chartering and operation rates, calculated in nominal terms, and for 20 years of operation. Petrobras will make the first payment only after the delivery and start of vessel operations.

SBM said that the delivery of the FPSO will be in 34 months after the signing of the letter of intent.

Operator Petrobras has a 65% interest in Block BM-S-11. Its partners are BG E&P do Brasil Ltda., 25% and Petrogal Brasil/Galp Energia, 10%.