JANUARY 2010

1. PRESALT

• Expected to surpass Gawhar in Saudi Arabia very shortly.

• Pre-salt in the Atlantic Ocean - part of a region that extends about 800 kms
along the Brazilian Coast.
• Waters as deep as 3,000 metres and as much as 7,000 metres below the
seabed beneath a layer of salt.

112,000 square kilometres

in deep and ultra-deep
water reservoirs, of which
41,000 square kilometres,
have not yet been put up
for tender.
2. PETROBRAS INVESTMENTS AND ”SHOPPING LIST

• Petrobras will invest US$174bn

through 2013. A total of 23 development
and production projects are forecast to
be up and running by this date.
• By 2020, US$111bn will be invested in
the pre-salt reservoirs alone.
• Petrobras is about to start the
purchasing program for 550 generators,
550 derricks, 350 turbines, 700,000 tons
of structural steel for platform hulls, 550
wet Christmas trees, 500 wellheads,
80,000 pumps, 18,000 storage tanks,
and 4000km of flexible lines.
2. PETROBRAS INVESTMENTS AND ”SHOPPING LIST

• Petrobras has more than 55,000 items

in a preliminary ‘shopping list’, of which
drilling packages and FPSO packages,
sub-sea equipment and compressors are
considered to be the most critical. The
company will also renovate its oil tanker
fleet with 26 ships already contracted
and another 23 to be tendered.
• 28 rigs will be built in Brazil: 24 10,000-
14,000 feet drillships, 4 semi-
submersibles.
• 18 FPSOs (some Petrobras officials say
40).
2. PETROBRAS INVESTMENTS AND ”SHOPPING LIST

• Almost 200 supply vessels.

• Revamp of 43 existing platforms.
• 4 additional LNG vessels.
• Six drillships in the international
area (despite the divestiture
programme in 17 countries – denied
by Petrobras).
3 – NATIONAL CONTENT REQUIREMENT

•These tenders will all contain

gradually increasing minimum local
content requirements that can go as
high as 95 percent in 2017.
•This means that interested
companies should run and start
looking out for local partnerships,
areas to establish new facilities,
operational basis, enrolment as
supplier with Petrobras (CRCC), etc.
•In the pre-salt area, the Brazilian
government has already made it
clear that the national content
requirements in E&P will escalate to
around 85 to 95 percent.
3 – NATIONAL CONTENT REQUIREMENT

• This means that whoever wishes to have

a piece of the pre-salt pie will have to
establish significant local presence, in
particular equipment suppliers (topsides,
pipes, risers, umbilicals, drilling
packages, power packages for offshore
units, etc.), who will likely need to build
production facilities in Brazil.
• As a result of this, international major
offshore contractors and suppliers are
establishing operational and
manufacturing facilities in Brazil, not to
mention shipyards.
• This is the only way these companies
will be able to have contracts with
Petrobras or Petrobras contractors in the
near future.
4 – CRCC REGISTRATION – PETROBRAS VENDOR`S LIST

• CRCC is a registration needed to have

companies included in PETROBRAS’
vendor list according to their product
lines.
• Based in the information contained in
the CRCC, PETROBRAS will invite
companies to participate in tenders or
direct purchase negotiation of products
listed in the CRCC data base.
• With very few exceptions, In a few
months, absent CRCC registration,
companies will be prevented from selling
or rendering services to PETROBRAS.
4 – CRCC REGISTRATION – PETROBRAS VENDOR`S LIST

• Companies are required to submit

literally more than a hundred documents,
and in-depth detail of its facilities,
manufacturing processes, personnel
working at each facility, technical
specifications of equipment, various
certificates according to each product,
and in-depth information and
documentation on each company legal
and financing standing.
• by a multidisciplinary group including
lawyers, engineers and accounting
people specialized in this kind of
registration, most of them retired, former
Petrobras engineers who worked at the
CRCC division.
CRCC registration is a highly
complex undertaking.
4 – CRCC REGISTRATION – PETROBRAS VENDOR`S LIST

• Due to our relationship with the

people in charge of this process
with Petrobras, developed over
years of work in this area, WE ARE
NOW IN A POSITION TO GET CRCC
WITHIN 90-120 DAYS FOLLOWING
FILING OF CRCC APPLICATION
form accompanied by at least basic
documentation. Other firms wil
likely take one year and a half or
two years.
4 – CRCC REGISTRATION – PETROBRAS VENDOR`S LIST

THE FIRM acknowledges it has read and understands the Foreign Corrupt
Practices Act (the “FCPA”) (15 U.S.C. Section 78dd-1, et. seq.) as amended.
THE FIRM represents warrants and covenants that it has not and will not
violate any provision of the FCPA, regardless of the applicability of the law as
a whole to THE FIRM. Specifically, THE FIRM represents, warrants and
covenants that it has not and will not, directly or indirectly, pay, promise or
offer to pay, or authorize the payment of, any money or give any promise or
offer to give, or authorize the giving of anything of value, to:
4 – CRCC REGISTRATION – PETROBRAS VENDOR`S LIST

(a) an employee of PETROBRAS, or

any officer, employee, agent or
representative of any government,
including any department, agency, or
instrumentality thereof or any person
acting in an official capacity therefore
or on behalf thereof;
(b) a candidate for political office, any
political party or any official of a
political party; or
(c) to affect or influence any act or
decision of such government or
instrumentality, in order to assist THE
CLIENT in developing a business
opportunity and in particular
registering THE CIENT`S companies
with PETROBRAS’s CRCC.
4 – CRCC REGISTRATION – PETROBRAS VENDOR`S LIST

(ii) No part of any remuneration paid by THE CLIENT or any of the entities
belonging to the economic group of THE CLIENT will be used directly or
indirectly to make any payment to any PETROBRAS employee, or someone
directly or indirectly related to a PETROBRAS employee, or to any person or
entity, or to provide any payment, gratuity, emolument, or other benefit to an
official of any government or any political party.
(iii) THE FIRM represents warrants and covenants that it will comply fully with
all applicable laws, rules and regulations of Brazil, the United States of America
and Norway.
5 – PETROBRAS CAPITALIZATION

In order to achieve such audacious

plans, Petrobras will rely on large
capitalisation from shareholders,
especially the controlling stakeholder,
the Brazilian Government. Petrobras
will further count on cheap and
abundant financing from government
development bank BNDES, and other
state-owned banks.
6. CHANGE IN THE STRUCTURE OF PETROBRAS’ CONTRACTS

In order to reduce prices of equipment,

and at the same time allow for the gradual
escalation of local content requirement in
its projects, the company is breaking up
large EPC, service and supply contracts
into smaller packages, emphasising
greater detail and standardisation of
orders, starting with an ambitious
program of eight FPSO's to be locally
built, in a dry-dock chartered by
Petrobras itself in the southern part of
Brazil, in a city called Rio Grande. In
order to reduce prices, Petrobras is also
planning to revise its standard contracts
in order to reduce risk to the supplier.
6. CHANGE IN THE STRUCTURE OF PETROBRAS’ CONTRACTS

Invitations going to Brazilian contractors,

who on their turn will procure technological
partners, operators, financials partners,
project companies, etc.
Most Brazilian contractors unfamiliar with the
petroleum offshore industry and still
“illiterate”.
Desperate need for association with
international companies.
By becoming established in Brazil, foreign
companies may avoid the situation above and
be directly invited to participate in tenders
competing with other Brazilian contractors.

New ports and shipyards are already under construction. It is already clear that
every major shipyard in the world will have a significant presence in Brazil (in
association with local major contractors) in the next couple of years.
7. PRIVATE OPERATORS

Private companies are coming up with huge

investments as well. Devon, Shell, Chevron
and StatoilHydro will collectively invest
US$25bn through 2013.
8. GAS PIPELINES AND LNG

In addition to this, a new law

opened up concessions for gas
pipelines. Among the projects
already authorised for tender is
the 948km Middle North Gas
Pipeline, budgeted at US$1.6bn.

In the gas sector, US$3bn will be

spent on developing
infrastructure for LNG. The target
is to build a liquefaction plant to
come into operation in 2013 with
a capacity to liquefy 10 million
cubic metres per day.
8. GAS PIPELINES AND LNG

Petrobras also intends to build a terminal

for docking LNG tankers in order to be
able to export LNG. Two LNG terminals
exist today (Pecém and Guanabara), and a
third one will likely be built in Rio Grande
in the short-term, with a capacity for 14
million cubic metres per day.
A fourth one is also been studied. Also
under study is the expansion of the LNG
terminal in the Guanabara Bay, from
current 14 million cubic metres per day to
20 million. With all the projects, Petrtobras
estimates capacity of 166 million cubic
metres per day of natural gas in 2017.
4 additional LNG vessels.
9 – ANP OIL LICENCES BID ROUNDS ON HOLD

ANP has not since 2007 held tender for new offshore exploration areas.
The industry is pressing government to conduct tenders of outside-pre-salt
areas urgently, for it cannot be in such a standstill for so long.
8. GAS PIPELINES AND LNG

The government froze all tenders until the

new regulatory framework for pre-salt is
introduced.
This includes production sharing
agreements for new areas and
maintaining the concession regime for the
areas already tendered, some as long ago
as 2000. The model is very much like the
Russian model, only that the PSC is
mandatory for the new areas, and not
discretionary. One can thus expect new
tender for promising areas outside the
pre-salt areas.
Tenders for the pre-salt areas may take a
while to come up, since a government-
proposed specific regulatory framework
for the pre-salt cluster has just been
passed on to Congress in the form of four
different bills.
10. CONCLUSION

(i) Brazil boasts a booming economy barely

shackled by the world financial meltdown;
(ii) Brazil is an investment-grade country;
(iii) Brazil blossoms among the BRIC's;
(iv) Brazil is clearly poised to become the huge
next safe hub for the world's smart money;
(v) Norway is a preferential partner for Brazil in
the oil and gas sector and in the petroleum
offshore industry.
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