Petrobras is expanding its oil and natural gas production capacity in the Brazilian pre-salt layer in an economically viable manner, the company said in response to a recent press report.
The company says that its break-even price, planned at the moment when its pre-salt production projects were approved, is around USD 45 per bbl, including taxes and not including natural gas transportation infrastructure spending. Inclusion of the latter spending may raise the total figure by USD 5 to USD 7 per bbl.
Furthermore, the stated break-even price assumes a well flow of between 15,000 and 25,000 bopd. Petrobras is currently producing average flows of 20,000 bopd in the pre-salt layer.
Some wells in the Santos Basin Pre-Salt Cluster have attained flows of more than 30,000 bopd, making projects more economical. For example, this high productivity has enabled the pilot production units of the FPSO Cidade de São Paulo (operating in Sapinhoá field) and FPSO Cidade de Paraty (deployed in Lula field) to reach their maximum production capacity, of 120,000 bopd, using just four production wells connected to each one.
This calculation presumes that all the projects’ expenditure (investment, operating costs and taxes) is associated with the price level of inputs prevailing at the time the projects were approved. It is important to highlight, however, that the costs of goods and services suppliers have historically been correlated with oil prices in the international market, the company said.
When there is a significant decline, as in the current case of the oil price level, this is accompanied, not always immediately, by a fall in costs in relevant parts of the goods and services sector. The effect of this reduction partially offsets the loss of revenue caused by the fall in oil prices.
It is also noteworthy that investment decisions in exploration and production projects — especially deep water ones — are based on scenarios that incorporate a long-term view, not only of prices, but also all the other inputs and costs of projects.