Brazil
Analysis

Why did Petrobras cancel a project for a new gas processing unit?

Bnamericas Published: Friday, May 13, 2022
Why did Petrobras cancel a project for a new gas processing unit?

Brazilian state-run oil giant Petrobras has decided to treat the natural gas from its Sergipe-Alagoas basin deepwater project on board the FPSO (P-81) topside, a source close to the subject told BNamericas on condition of anonymity.  

This means that the company will not have to build a natural gas processing unit (UPGN) on the continent, just a receiving and equalization installation, which will require lower investment. 

Petrobras launched a request for information (RFI) to evaluate the market conditions for the construction of a UPGN, but, after additional studies, it canceled the project as it concluded that the gas from the undertaking has lower CO2 content than initially expected and can be treated on the FPSO. 

“It’s a solution similar to the one Equinor adopted for Pão de Açúcar [a gas project in the Campos basin]," the source said. 

Another source familiar with the subject said that Petrobras may opt to initially reinject the gas and only export it to the shore in the second development stage of the project. 

Petrobras declined to comment on the issue when contacted by BNamericas. 

The start of production from the deep waters off the coast of Sergipe is scheduled for 2026 through an FPSO capable of extracting 120,000b/d of oil and exporting 8Mm3/d of gas via a new pipeline comprising offshore and onshore stretches of 100km and 28km, respectively. 

Petrobras recently disqualified Ocyan’s proposal to build and operate the P-81, according to sources involved in the tender process. 

During a press conference last week, the company’s production development director, João Henrique Rittershaussen, said he could not comment on the matter as the process “was still open.”

A second FPSO is expected to be installed in the area on a date after 2026, but yet to be confirmed. 

Located in water depths of approximately 2,400m, the Sergipe deepwater area encompasses seven fields that were declared commercial by Petrobras last January: Budião, Budião Noroeste, Budião Sudeste, Palombeta, Cavala, Agulhinha and Agulhinha Oeste for the areas of exploratory blocks BM-SEAL-4, BM-SEAL-4A, BM-SEAL-10 and BM-SEAL-11.

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