Analysis: Petrobras Invests Heavily in Offshore Drilling

With massive deepwater finds in the pre-salt layer, as well as the Campos and Santos Basins, Brazilian state-owned Petrobras pledged an investment of $174.4 billion for 2009 to 2013. With a firm commitment to exploration and production, the company hopes to become one of the five largest energy companies in the world.

In an interview with Rigzone, a Petrobras executive explained that the company was able to achieve its recent successes because it invested when times were tough."This allowed the company to develop in deepwater oil production, in the '80s when only a few companies could do it because the prices were not lucrative," explained Decio Fabricio Oddone da Costa, CEO of Petrobras Energia.

"When the global scenario changed, at the end of the '90s, Petrobras was already prepared technologically, as well as managerially and operationally, to explore and produce oil in unconventional conditions, and so it started to experience, in a more accelerated manner, the fruits that it planted so long ago," said Oddone.

The Rig Count Adds Up

Accomplishing this rise partly through increased exploration, appraisal and development drilling, Petrobras has a massive amount of deepwater and ultra-deepwater rigs contracted and working for the company now through 2013.

Starting from April 2009 and looking forward through 2013, Petrobras has contracted no less than 34 semisubs and drillships. In fact, the yearly averages of floaters contracted by Petrobras range from 39 rigs in 2009 to 47 rigs in 2010, 48 rigs in 2011, 53 rigs in 2012, and 52 rigs in 2013. The future rig counts portray the biggest increases in number of rigs between 2009 and 2010 with a 20% rise in average rigs contracted, followed by an increase of 11% in average rigs contracted between 2011 and 2012. Petrobras has the most floaters under contract in July and August of 2012, with 58 deepwater and ultra-deepwater rigs.

This commitment to drilling in the next five years is in stark contrast to super-majors BP, Chevron, ExxonMobil and Shell. While Petrobras is beefing up its rig count over the coming years, each of these companies has contracted substantially fewer floaters.


Average Number of Semis and Drillships Contracted


Over the same time period, BP contracted the most deepwater and ultra-deepwater rigs in 2009, with an average of 11 floaters contracted to work for the British company for the remainder of 2009. The number of rigs contracted by BP drops dramatically through the next five years, with a low of five rigs contracted for the majority of 2013. Furthermore, Chevron has more rigs working for the remainder of 2009, but that number drops, as well. Although the remainder of 2009 averages 11 rigs, Chevron drops to a low of four rigs in 2014. ExxonMobil is similar with an average of 5 rigs contracted for the remainder of 2009 and those contracts dropping off to a low of one rig in 2013. Shell starts off the strongest of the bunch with an average of 15 floaters through the remainder of 2009, but its numbers also dwindle to a low of two rigs by the end of 2013.

Additionally, Petrobras has contracted the most newbuild rigs of any operator. Out of the 88 deepwater and ultra-deepwater floaters that are currently being built or are slated to be built, 59 have contracts executed on them -- and Petrobras holds the contracts on 29* of those newbuilds, representing nearly 50%.

Drilling Commercially Viable at Current Price

While not all of the deepwater and ultra-deepwater rigs Petrobras has under contract will be working in Brazil, the large majority of them will be. Furthermore, the company is confident that the expense incurred will be worth it.

Solidifying the company's practiced theory of rising to the top through investments during economic downturns, the CEO of Petrobras, Jose Sergio Gabrielli confirmed that the company believes drilling in its sub-salt basins is a low risk.

Speaking at a Brazilian congressional public hearing on March 25, 2009, Gabrielli claimed that sub-salt exploration and production was commercially viable for Petrobras even with crude prices ranging between $40 and $50 a barrel. "We've found oil in 16 of the 16 wells we've drilled," Gabrielli simply stated.

With reserves estimated in 2008 at 14 Bboe, Petrobras needs to drill a host of development wells in the sub-salt layers of the hydrocarbon-rich Espirito Santo, Campos and Santos Basins to make good on the promise of its discoveries in the area. That need for development and continuing exploration coupled with the long-term vision of its executives makes it clear why Petrobras has contracted more deepwater rigs than any other major operator.

*Note: These numbers include one ultra-deepwater drillship, yet unnamed, that is currently under construction and owned by a Petrobras JV.


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Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
JorHer | Apr. 4, 2009
I consider Brazil as one of the emergent countries to continuous developing in pursuit of a better standard life for his people.

Unfortunately, my country Venezuela, even though the valuable experience in oil it should be accumulated, however it will continuous decreasing in his economy and we will face very hard moments in the near future. What a pity.

Mech. Engr. Naval Arch. & Marine Engr.

Sanjay | Apr. 3, 2009
It is indeed a welcome news for all the down & out poor-out-of-job offshore companies.... their coffers will start filling again.

Dr. C S Sandhu | Apr. 2, 2009
Today's investment will be tomorrow's credit. But they must start to add more reservoir/production engineers to handle this magnitude of reserves for production and development of coming new reservoirs.

Brian Dirk | Apr. 2, 2009
I feel that it is an excellent move on Petrobras' part as it would seem to me that it is good business to take advantage of the times to increase the wealth in the coffers, so it is there come better times which are sure to come in a couple of years.

Ricky Harris | Apr. 1, 2009
Now is the best time to start this project, but Petrobras needs to be smart about how they plan to drill these wells for maximum production. The price of oil is going up and will continue to rise, and be at an all time high by the end of the year.

Frank McCormack | Apr. 1, 2009
Having worked as an expat for a major Drilling Contractor in Brazil over the last 25 years I personally think their way of thinking has brought them to the point where they are the major in Ultra Deepwater drilling. I worked on some of the first deewater drillships in Brazil; the people were hungry for the experience then and are more so now. I wish them every success, to come from where they started to where they are now is an accomplishment to be proud of.

Frank McCormack

Senior Subsea Supervisor

Capt Pinheiro | Apr. 1, 2009
I do totally disagree with the last post. There is capable personnel to attend the necessities in Brazil. Some exchanges of experience its really necessary everywhere but differently like a "help". Some people forget about Petrobras Pionner technology for ultra deepwaters.

Angel Carchipulla | Apr. 1, 2009
I think that Petrobras has a big project, and I am sure Petrobras will be the best world wide company because Petrobras is not thinking just in oil and gas.

Anonymous | Apr. 1, 2009
I think they need to hire more expats to help them. I am currently working in Brazil, and it seems that they are in over their heads at times.

Larry Seguin | Apr. 1, 2009
I believe that Petrobras will be close to the largest producer. Before 2013 the offshore and on land drilling rigs will be at its lowest count in 20 years. This is all based on the massive amount of new discoveries in the oil and gas sector.

All over the world countries are changing to the use of Natural Gas. Oil will also fall below $20.00 a barrel.

I have worked in the oil industry around the world for 35 years.

Larry Bobbitt | Apr. 1, 2009
I have just returned from a weeks visit to Rio and Macae for the purpose of accessing the opportunities available over the next 5-7 years. As your article does above, I spoke with several drilling contractors and they confirmed that opportunities will be plentiful. To capitalize on the full benefits of their heavy investment in offshore drilling, it is clearly evident that Brazil is in the process of improving their infrastructure in both Macae and Rio. Also, service companies are increasing the size of their offices and storage warehouses. This is good for everyone!!!! We have to be in Brazil!!!!

Jason Hammick | Apr. 1, 2009
great article

Joaquim Leao | Apr. 1, 2009
This represents huge opportunities for foreign companies to invest in Brazil which will be probably the next technology frontier for offshore business development. From construction contractors to specialized offshore activities and engineering companies all will experience great development if they take the risk to operate in Brazil. If one company wants to keep in pace with the future, then this company will think strategically and will invest in Brazilian branches and operations.

John Gall, CBs Aberdeen Scotland | Apr. 1, 2009
Petrobras has vision and determination that will eventually reap the rewards the country rightly deserves. However environmental aspects of these deepwater challenges should be considered as a ongoing issue

Colin Fitzpatrick | Apr. 1, 2009
Nice to hear after all the depressing news of recent times regarding drilling activities being halted or deferred via other operators.

Ivan Couto | Apr. 1, 2009
Kind of strategic decision but supported by the fact that their prices and the company is controlled by the Brazilian government. This simple fact gives them the necessary financial support to keep moving on. From survey to production a couple of years is required. Doing that during a moment like that, where more resources are available from Service Companies, will guarantee a blue sky to them when the crisis is gone and oil prices return to higher levels. Petrobras will be ready to become a strong exporter and big player in the oil market. Right now the production is focused to their internal market mostly.

Farooq Khan | Mar. 31, 2009
Within Excellent time frame for the right E&P Investments for continued growth and that's Good for Petrobras!!
Farooq Khan, M.Sc., *Ph.D., (OU, India) AIPG, AAPG

Kevin Kelley | Mar. 31, 2009
Good for Petrobras! They are taking risks today that will benefit the people of Brasil for decades to come.

Kevin Kelley, League City Texas.

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