Repsol, Galp Join Natural Gas Liquefaction Project in Brazil's Pre-Salt

Repsol and Galp Energia have joined the joint venture, formed initially by Petrobras and BG Group, to develop a FEEDs (Front Engineering and Design) aiming to build an onboard natural gas liquefaction unit (ONGU) to operate in blocks BM-S-9 and BM-S-11 in the Santos Basin's Pre-Salt Pole, located 300 kilometers off the Brazilian coast. The ONGU, an unprecedented project in the world, is one of the technological transportation solutions that can be used to outflow the natural gas produced in the pre-salt layers.

With these two companies entering the partnership, stakes in the project have been redistributed. Petrobras holds 51.1% of the stakes in the joint venture, while the three partners (BG, Repsol, and Galp Energia) split 48.9% of them equally, each with 16.3% interest in the project.

The tender for the preparation of the FEED for an ONGU unit was started last August. All of the companies that were invited submitted proposals, which were sent in on October 26. Each bidder formed a consortium with oil industry agents with renowned experience in building FPSOs (floating oil production, storage and offloading units) and LNG plants. The contracts with the three companies that won the tender will be signed next week.

The purpose of developing three FEEDs is to drive competition among the suppliers and, thus, help reduce unit deployment costs. The winners have 12 months to prepare the FEEDs. After this term, a technical and economic assessment will be made of the alternatives to outflow natural gas from the Santos Basin in order to pick the one that is most feasible to be built.

Once a decision has been made to deploy the ONGU, it will be installed near the oil and gas production units (FPSOs) and 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).

The companies that are partners in the joint venture 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 the 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.