Brazil's Subsalt Discoveries - Offshore Brazil Emerges as a Leading

Investment Destination for Global Oil and Gas Companies

Brazil to Emerge as One of the Top Oil Exporters Globally by 2020

The rapid increase in subsalt production in Brazil will allow the country to emerge as a
major oil exporter by 2020. Brazil’s oil production is expected to reach close to 5.2
million barrels per day (bpd) by 2020, making the country one of the top five oil
exporters globally. A large part of this production growth is expected to come from the
subsalt basins as the total subsalt oil production in Brazil is expected to reach 1.8 million
bpd in 2020.

The New Subsalt Legislation Will Diminish the Attractiveness of Brazil's Upstream
Sector for International Oil Companies
Huge oil and gas finds in the subsalt areas have prompted the Brazilian government to
develop a new petroleum regime for the region. The new regime will abandon the
concession system and shift to production sharing contracts. Through the new
legislation, Petrobras will be granted full ownership of new subsalt acreage and will be
guaranteed a minimum of 30% share of any subsalt area that the government decides to
tender in licensing rounds.
These legislative changes will diminish the attractiveness of Brazil's upstream sector to
international oil companies. The companies already operating in the subsalt areas will
continue to operate under the existing terms but the changes in the law will significantly
reduce the chances of companies without subsalt acreage having interests in these
resources. This is especially true for areas that the government thinks have a high
chance of exploration success or of large discoveries.
Even if new companies do secure access to subsalt exploration ventures, they will be
unable to control projects because Petrobras will act as the operator of these projects.
Further, under the new competitive production-sharing system, the financial rewards
will also be lower.

For further details, please click or add the below link to your browser:
http://www.globaldata.com/reportstore/Report.aspx?ID=Brazils-Subsalt-Discoveries-
Offshore-Brazil-Emerges-As-a-Leading-Investment-Destination-for-Global-Oil-and-Gas-
Companies&ReportType=Industry_Report&coreindustry=ALL&Title=Oil_~_Gas

Huge Capital Requirement for the Development of the Subsalt Region Remains a
Major Hurdle
The technological challenges in the development of the subsalt reserves and the
concerns about getting the produced oil and gas from deep offshore to onshore areas
have made development of these reserves capital intensive. It is estimated that the
development of the oil these fields could entail investment of up to $400 billion.
As Petrobras is the leader in the development of the subsalt area in Brazil, a major part
of the investment in the region is expected to come from the company. Petrobras
intends to spend approximately $111.4 billion in subsalt development. It is estimated
that Petrobras’ overall spending may increase to approximately $200-$220 billion during
2010-2014.
Petrobras is also looking at different financing options to fund its ambitious investment
program. The $10 billion loan for oil agreement with China in May 2009 was a major
step in this direction.
In addition, major international oil companies operating in the subsalt areas are also
expected to invest a considerable amount in the development of the reserves during
2010-2020. Over the next ten years, BG and Repsol are expected to together spend
approximately $35 billion in the development of the Brazilian subsalt reserves.

Subsalt Finds Will Help Petrobras to Become One of the Largest Oil Producing
Companies Globally
Petrobras is expected to emerge as one of the largest oil producing companies globally
with total oil production reaching 4.3 million bpd by 2020. The company’s production
from Brazil is expected to reach 3.9 million bpd by 2020 with approximately 1.2 million
bpd coming from subsalt basins. The company aims to become one of the five largest
publicly traded oil producers by 2020.

For further details, please click or add the below link to your browser:
http://www.globaldata.com/reportstore/Report.aspx?ID=Brazils-Subsalt-Discoveries-
Offshore-Brazil-Emerges-As-a-Leading-Investment-Destination-for-Global-Oil-and-Gas-
Companies&ReportType=Industry_Report&coreindustry=ALL&Title=Oil_~_Gas

Major New Finds in Brazil’s Subsalt Basins Reaffirm South and Central America’s Huge
Oil and Gas Potential
The new discoveries and appraisal wells drilled during 2009 in Brazil’s subsalt region
have reinstated the potential of this area. The most important development in 2009 was
the formation test in Guara (BM-S-9), which confirmed recoverable volumes of 1.1 to 2
billion barrels of oil equivalent (boe) in the field and productivity of 50,000 boe per well.
Petrobras has announced four different discoveries in BM-S-9 alone – namely Guara,
Carioca, Iguazu and Abre West.
In addition, Tupi’s reserve potential of 5- 8 billion boe was reaffirmed by the discovery
of hydrocarbon in Iracema and Tupi Nordeste wells. The formation test in Iara (BM-S-11)
also reaffirmed the estimates of 3-4 billion boe for this prospect.
The additional wells drilled in the subsalt region, especially in the Santos basin pre-salt
cluster, confirm the huge potential of Brazil’s subsalt basins. With total estimated
reserves of 50 billion and 80 billion boe, Brazil’s subsalt areas hold huge potential for
future growth.

Subsalt Oil Reserves in Brazil Will Become Major Investment Destinations for
International Oil Majors
Huge oil discoveries in Brazil’s subsalt basins have attracted the interest of oil and gas
players globally. These subsalt basins are expected to give a major boost to the
revenues of major international oil companies, which have interests in these basins. The
assets are expected to emerge as core assets for these companies in the coming years.
For example, BG Group’s net production from its interest in recent subsalt discoveries in
Brazil is expected to reach approximately 445 thousand barrels of oil equivalent (boe)
per day by 2020. Repsol and Petrogal also believe that the subsalt assets will prove to be
transformational in terms of the future growth of the companies. Anadarko also expects
the recent Campos basin discoveries to turn into a “mega-project” for the company.

GlobalData’s report, “Brazil's Subsalt Discoveries - Offshore Brazil Emerges as a Leading

Investment Destination for Global Oil and Gas Companies” provides key data,
information and analysis on Brazil’s subsalt discoveries. Brazil has quickly emerged as
the one of the important regions for offshore crude oil production in the world. With
new fields, mostly offshore, and huge reserves being discovered in recent years, Brazil is
fast emerging as the top crude oil producer. Subsalt reserves which are typically
petroleum reserves thousands of meters below layers of sand and rocks and salt contain
huge reserves of oil. Recent sub-salt discoveries have transformed Brazil into a country
with one of the highest potential investment acreages globally. Tupi Field, which was
discovered in November 2007, is the largest discovery in North and South & Central
Americas since 1970. It has estimated recoverable reserves of 5-8 billion barrels. This
discovery in the pre-salt layer, which extends from the State of Espírito Santo to the
State of Santa, is considered as one of the most attractive exploration acreages
worldwide. It will increase Brazil’s recoverable reserves of crude oil by 50%, which will
significantly increase the revenues of the country’s oil and gas industry.

For further details, please click or add the below link to your browser:
http://www.globaldata.com/reportstore/Report.aspx?ID=Brazils-Subsalt-Discoveries-
Offshore-Brazil-Emerges-As-a-Leading-Investment-Destination-for-Global-Oil-and-Gas-
Companies&ReportType=Industry_Report&coreindustry=ALL&Title=Oil_~_Gas

Or Visit our report store: http://www.globaldata.com/reportstore

Contact Information:
Rajesh Gunnam
rgunnam@globaldata.com
+914066166782