Total signs $2.2bn upstream and downstream deals with Petrobras

Total signs $2.2bn upstream and downstream deals with Petrobras

Dec 22, 2016
3 min read
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Total has signed big upstream and downstream asset deals with Brazil's state-run oil firm Petrobras that will see the French oil giant take operatorship of Lapa pre-salt field and large interests in two other pre-salt licences in Brazil.

The new agreement reinforces the joint partnership and cooperation between the two companies announced in October 2016 covering operations, research and technology. The acquisition of the upstream and downstream interests in Brazil from Petrobras will cost Total around $2.2 billion.

Patrick Pouyanné, Chairman and CEO, said: “I am delighted today to see the concretization of our Strategic Alliance with Petrobras. These agreements will reinforce Total’s position in Brazil through access to outstanding pre-salt resources while entering the promising gas value chain. I’m confident that both companies will be able to create significant value by sharing their technical expertise, leveraging operational excellence and further reducing costs.”

On the upstream front Total will also become partner to Petrobras in two high-quality pre-salt licenses of the prolific Santos basin. The BMS-11 with the “Iara” fields currently under development where Total will acquire a 22.5 per cent interest from Petrobras, and in the BMS-9 with the Lapa field which just entered into production and where Total will become the operator of the license with the acquisition of a 35 per cent interest from Petrobras.

In the downstream sector, Total will buy regasification capacity in the Bahia LNG terminal and a 50 per cent interest in two co-generation plants located in the Bahia area as well as pipeline transport capacity, enabling Total to supply gas to the two co-generation plants.

In a statement Total said it will also offer to Petrobras the option of taking a 20 per cent stake in the Perdido Belt deepwater exploration Block 2 recently awarded in Mexico.

Commenting on the Total and Petrobas deal Dr Valentina Kretzschmar, Director: Corporate Research at Wood Mackenzie said: "Pre-salt deepwater Brazil offers access to low-cost, long-life resources, and will help shift Total's portfolio to the lower end of the cost curve - in line with the company's strategy. A rebound in oil prices, combined with a new phase of strong cash flow growth, will fuel Total’s new business development opportunities."