Brazil’s E&P decommissioning to demand US$1.9bn

Brazil’s exploration and production decommissioning process is expected to demand 9.8bn reais (US$1.87bn) in 2023, according to projections by oil and gas regulator ANP. 

The process involves 307 wells, of which 89 located offshore. 

Trade group and company representatives told BNamericas that local suppliers see the upcoming process as an attractive business opportunity.  

Approximately 5bn reais of the total capex will be required for the permanent abandonment of installations. 

Pipes removal (3bn reais), demobilization of production units (1.2bn), environmental recovery (248mn), subsea equipment removal (174mn reais) and well abandonment (74mn) will make up the remainder. 

The Campos basin accounts for 76% of next year’s capex. It is responsible for the development of Brazil’s offshore production, starting in the 1980s, more than two decades before the major Santos basin pre-salt discoveries.  

975mn reais will go to the Sergipe basin, followed by the Santos (885mn), Espírito Santo (146mn), Ceará (102mn), Potiguar (88mn) and Recôncavo (62mn) basins. 

National oil company Petrobras, which accounts for 65% of the country’s hydrocarbons output, is the operator of most of the projects that are in the decommissioning stage. 

The company’s 2023-27 business plan includes the decommissioning of 26 platforms (12 fixed, six semi-submersible and eight FPSOs) and 2,500km of risers and flowlines, with a total investment of 9.8bn reais.

Another 27 Petrobras platforms are slated to be decommissioned between 2028 and 2030. 

Telmo Ghiorzi, executive secretary of Brazil's oil and gas supplier association (Abespetro), highlighted the fact that some of the past decommissioning plans were not implemented. 

"Production from mature fields or their decommissioning are both favorable options for suppliers of goods and services. The expectations are therefore positive whatever the decisions of the oil companies, to produce more or decommission," he told BNamericas. 

Seacrest purchased the Cricaré onshore hub, in the Espírito Santo basin, from Petrobras in 2020, and investments have seen production rise from 600b/d to 2,000b/d. 

It plans to take over the Norte Capixaba hub, also in Espírito Santo, at the end of this year. 

"With the addition of this asset to Seacrest’s portfolio, our major decommissioning projects will be implemented as of 2030," a spokesperson for the company told BNamericas.  

Regarding potential suppliers, the plan is to prioritize local firms who have the know-how and “have worked with us in the production campaign,” the spokesperson said.

Ghiorzi said there are no major technological bottlenecks to be concerned about. 

"The typical bottlenecks in decommissioning are the same as in other countries: availability windows of the big lifting machines, the so-called heavy-lift machines."

Brazilian shipyards are also eyeing the decommissioning process as offshore construction demand has been weak in recent years due to a reduction of local content requirements. 

“There’s great expectation that there will be decommissioning and dismantling of rigs, platforms, and ships in Brazil. There’s nothing concrete yet, but we expect this to happen next year,” Sérgio Bacci, executive VP at the country’s shipbuilding industry group (Sinaval), told BNamericas. 

According to Bacci, the local shipyards, especially the large ones, are technologically prepared to meet this demand. 

“The Estaleiro Atlântico Sul (EAS) shipyard, for example, has been talking with companies to obtain the necessary certifications to enter this dismantling market,” he said.  

There is new legislation being debated in congress that would set rules for this kind of work, said Bacci.

“There's no point in having a large amount of planned dismantling if there’s no legislation to ensure that these works are carried out in Brazil. Otherwise, whoever acquires these assets will take them to other countries where the labor is cheaper.”