Petrobras Awards FEED Contract for Floating LNG Unit

On Friday, December 18, Petrobras, BG Group, Repsol and Galp Energia, partners in the joint venture aimed to build an onboard natural gas liquefaction unit (ONGU) to use the gas from the pre-salt area, signed the agreements with the best bidders in the tender to develop the FEED (Front End Engineering and design) for the liquefaction unit.

The winners were Saipem (Italy) and the SBM (Switzerland)/Chiyoda (Japan) and Technip (France)/JGC (Japan)/Modec (Japan) consortia. The tender, carried out in the international invitation mode, was launched last August, and the offers delivered in October.

With acknowledged experience in building FPSOs (floating production, storage and offloading units for oil and gas) and LNG plants, the hired groups have up to December 16, 2010 to develop the FEEDs, and the projects will be carried out parallelly. The purpose is to drive competition among the suppliers and, thus, help reduce unit deployment costs.

In 2011, based on the technical and economic feasibility analysis of the FEEDs and of other alternative solutions, such as installing submarine gas pipelines, a decision will be made regarding the best option to outflow the gas from the Santos Basin's Pre-Salt Pole.

Once the deployment of an onboard liquefaction unitized as the most feasible alternative from the technical and economical viewpoints, a new tender will be opened to pick, from among the groups that will develop the FEEDs, the one that will be in charge of building and operating the project, the completion of which is planned for July 2015.

Without Precedents

An unprecedented project in the world, the onboard natural gas liquefaction unit (ONGU) will operate in Santos Basin Pre-Salt Pole blocks BM-S-9 and BM-S-11, located some 300 km off the Brazilian coast. The unit will be installed near the oil and gas floating production, storage and offloading units (FPSOs), and will receive, process and liquefy up to 14 million cubic meters of associated gas per day.

The ONGU will also store and transfer processed products (LNG, propane, and butane) to vessels, which, in turn, will then transport it to the consumer market. In the case of LNG, the product will be delivered to regasification terminals, where the natural gas is transformed from the liquid to the gaseous state and, finally, injected into the gas pipeline network. In Brazil, Petrobras' LNG regasification terminals are installed in Pecém (state of Ceará) and in the Guanabara Bay (state of Rio de Janeiro).

Petrobras holds 51.1% of the stakes in the joint venture that will develop the FEEDs to build the ONGU unit. The three partners (BG, Repsol, and Galp Energia) split the remaining 48.9% equally, each with 16.3% interest in the project. These companies are also partners in blocks BM-S-9 (Petrobras, BG Group, and Repsol) and BM-S-11 (Petrobras, BG Group, and Galp Energia). Together, they will share resources and competencies in order to develop and deploy this innovative project.

Strategic to Petrobras and to its partners, the ONGU project will allow Santos Basin's Pre-Salt Pole gas reserves to be monetized, ensuring flexibility to supply the internal market and the possibility of exporting the product in the spot market during periods of low demand in the Brazilian thermoelectric segment.

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