Petrobras Declares Commerciality at Iara Area Offshore Brazil

BG Group announced Tuesday that its partner Petróleo Brasileiro S.A. (Petrobras), as the operator of block BM-S-11 in the pre-salt Santos Basin, has submitted the Declarations of Commerciality (DoC) to the Brazilian National Agency of Petroleum, Natural Gas and Biofuels (ANP) for three separate oil and gas accumulations in the Iara area, offshore Brazil. As part of the DoC, the consortium has suggested that the new fields be designated Berbigão, Sururu and Atapú West.

The Iara area is located approximately 155 miles (250 kilometers) off the coast of Rio de Janeiro, in water depths of around 7,448 feet (2,270 meters). All fields contain good quality oil, of approximately 24 to 30 degrees API.

The DoC submission follows an exploration and appraisal program which began in 2008 and consisted of acquiring 3D seismic data, drilling seven wells as well as performing an extended well test. The encouraging results from this program continue to reinforce BG Group’s view of gross recoverable volumes in the BM-S-11 Iara area. The DoC notification to the ANP includes the operator’s estimates of total recoverable volumes of the three accumulations.

These three accumulations extend outside the BM-S-11 Iara concession area and into the Entorno de Iara Transfer of Rights area which is 100-percent operated by Petrobras and will therefore be subject to unitization agreements. Unitization of the Entorno de Iara area will be required with Berbigão to the north and south, with Sururu to the north and south and with Atapú West to the east.

The regulation requires a development plan to be submitted within 180 days of the DoC. However, because of the need for unitization agreements to be negotiated, the ANP may amend this deadline and allow submission of a unitized area development plan when the unitization agreement is signed.

The initial development of the unitized accumulations is expected to be based on three FPSOs, adding to the 10 production units currently planned for the Lula and Iracema areas. Subject to a complementary campaign for data acquisition, additional production units could be contracted by the consortium.

Ahead of the submission of the Development Plans for ANP, the partners will be working on the deployment and allocation of the initial planned FPSOs as well as negotiating the required unitization agreements.

The total amount of resource that BG Group believes will ultimately be recovered is not expected to be affected.

The DoC is another major milestone in the first phase of development of BG Group’s significant interests in the region, marking the start of the production period of the fields.

BG Group has a 25 percent interest in the BM-S-11 concession, offshore Brazil (Petrobras, operator 65 percent, Petrogal 10 percent).


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