South America’s number one producer of oil and gas has just achieved Brazil’s long-standing goal of having a self-sufficient oil industry. Recently, Petrobras has also won recognised awards for its transparency, sustainability and technology, and is now diving deeper into the Brazilian basin to double its production during the coming years. However, a number of challenges have to be overcome first.
DNV Forum wanted to discover what is going on deep below the Brazilian sea level and within the Petrobras organisation, so we asked Cristina Pinho, Petrobras’ general manager of production installation, for an update from the Latin-American oil major. Ms Pinho appears to be a charismatic mix of a skilled business manager and a mechanical engineer. Before taking up this position, she had a long technical career within the company, ranging from facilities installation manager to offshore production manager at a number of platforms and mooring and maritime terminal manager. So obviously, she knows her business very well from a number of dimensions. Our talk with her also revealed a broad knowledge of international business and politics – skills which no doubt smooth Petrobras’ progress deeper into the Brazilian basin and its worldwide operations in the fields of oil, gas and alternative energy.
“The challenges are numerous, but we will solve them,” she laughs confidently.
Doubling production
Brazil wants to double its oil production by 2015 and maintain its newly won oil self-sufficiency – and increase its gas production. To reach these goals, Petrobras will make substantial investments by 2015.
“We will invest USD 17.5 billion per year with one major goal: to almost double our production to 3.5 million barrels per day. And more than half of our investments are related to exploration and production,” she explains.
The challenge is not the amount of money, but the lack of human and industrial resources in Brazil. “This is a general problem for our country, and we have so many projects that the local industry can’t support all of them at the same time. Brazil today has more than 60% local participation in projects, and we even want to increase this significantly,” she states.
Being the major driver in Brazil’s oil and gas business, Petrobras has a responsibility to deal with this challenge to develop the country’s industry. “That’s why the government launched the Programme of Mobilization of the National Industry of Oil and Natural Gas together with Petrobras. This programme’s objective is to improve the industry, the shipyards and human resources. We work very hard in order to obtain this support domestically,” she points out.
Drilling deeper into the basin
Petrobras also has a number of technology development programmes. “Our PROCAP evolution started in 1986 with the PROCAP 1000. At that time, the main objective was to explore and produce oil down to depths of 1,000 metres. Today we have advanced to the PROCAP 3000, which deals with our operations down to 3,000 metres. Actually, all the new Brazilian developments are in deep waters of more than 1,000 metres, so apparently it was not meant to be easy to find oil in this country – it’s not like in the Emirates where all you need is a straw in the desert,” she notes with a hint of irony.
“Our reservoirs contain both light and heavy oil, but we want to discover more light oil and gas so as to significantly reduce the amount we import. Also, the increased demand from the Brazilian market is a major reason to increase exploration and production. Today, gas counts for only 10% of the Brazilian energy matrix, and we want to increase this to 15% during the coming years, and of course Petrobras has a very important role to play in reaching this goal. Regarding gas, we want to reduce our dependence on Bolivia and, by the end 2008, we will increase our production by 30% to 40 million standard cubic metres per day,” she says.
She continues; “We have reservoirs of light oil, but in some cases it’s difficult to drill there and sometimes there are high levels of contaminants, especially mercury. In one area, we have to drill 11 km between the soil and reservoir. This is a record for us. The good news is that we are going to establish a new programme which combines different disciplines to address these new challenges.”
However, the new Santos basin is promising and is rich in light oil and gas. Petrobras have big plans for this area, with more than 10 new units planned to be installed in the next 15 years. “Parallel to this, there are huge fields of ultra heavy oil in the Campos basin that we will develop until 2011 using two new installations. In Brazil, the heavy oil doesn’t have so many contaminants. It’s heavy, but is environmentally friendly – and actually not so difficult to process in our refineries,” Ms Pinho explains.
A big focus for Petrobras in the future will be subsea separation. “We’ve established a four-year research project in which we will separate oil from water and re-inject this water into the reservoir,” she says. “We are using an oil and gas separation system with boosting (VASPS). This equipment has been in operation since 2004 in the Campos Basin, and has increased our oil production by 1.5 million barrels in three years.
Sustainability focus
Petrobras is increasingly being recognised as a highly sustainable company that contributes to the development of Brazil. Goldman Sachs’ 2005 report on the Sustainable Investment Energy Sector cited the company as one of the world’s six best investment opportunities. Furthermore, Petrobras rose from seventh to second place in the ranking of the Management and Excellence Annual Multi-Client Study 2006, which highlights the 15 most sustainable and ethical oil companies in the world.
Petrobras has also now been included in the Dow Jones Sustainability World Index, which acknowledges the most sustainable companies in the world. “This is an important recognition for us because we take economic, environmental and social questions seriously, and at the same time obtain good results,” Ms Pinho states.
“In addition to the operational aspects, Petrobras has a huge focus on the social impact of its operations. This is in line with our efforts towards social responsibility, highlighted by the Petrobras Zero Hunger Program and the Petrobras Environmental Program,” she says.
Last year, Petrobras was also listed on the New York Stock Exchange. This is very important for Petrobras’ image and gives the company worldwide credibility. To achieve a listing here, a company must have tight governance, processes and transparency, while keeping its operations very well organised.
Safety first
Although Petrobras has huge growth ambitions, she emphasises that these cannot be achieved at the expense of health, safety and the environment. Back in 2002, the company experienced two major accidents, leading to an even greater focus on reducing the risks posed to employees and the environment.
Ms Pinho explains; “Due to these accidents, we started a programme to ensure the excellence of operational issues which aims to increase the safety on our platforms and onshore stations, in addition to our programme for excellence in environmental and operational safety. Both programmes have already led to dramatic improvements. In 2006, Petrobras recorded the lowest accident rate with injury leave in its 53 years of existence – below the world average for this sector.
“Clearly, one of our most important programmes is GIEN (Integrated Management of Naval Engineering), which gives us an instant response in the case of incidents. We established this together with DNV and I’m convinced it’s unique and very advanced. The main emergency centre is located in Macaé city -- north of Rio de Janeiro state -- and is supported 24/7/365 by DNV. Here we store and can access all the platforms’ and installations’ instantly-updated main documents, and also have online access to response resources. In addition, we have connected protection centres in a number of strategic places in Brazil. With this in place, we can mitigate accidents quickly whether they occur at sea or on shore,” she points out.
Alternative energy in balance
In addition to oil and gas, last year Petrobras focused more of its attention on bio diesel and alternative energy. “Even though we are already producing ethanol or bio diesel, the country must plant a lot of new sugar canes to meet the extended demand. However, this will have to compete with other vegetables and plants intended as food. So, there will always be a balance between gas, ethanol, diesel and petrochemicals.”
“The world will not have a substitute that can replace petrochemical products in the coming 100 years. Of this I am quite sure. The big issue now, however, is CO2 emissions. We are addressing this issue seriously by working hard to reduce our emissions. Although we have increased our activities, our CO2 emissions fell by 10% in 2006,” she concludes.