OREANDA-NEWS. In the presence of the President of Brazil, Dilma Rousseff, and of our CEO, Maria das Gracas Silva Foster, the exploration and production agreement for the Libra area, located in the pre-salt area of the Santos Basin was signed last Monday, Dec. 2, at the Planalto Palace, in Brasilia. The area was acquired by the consortium we formed (operator, 40%) with Shell (20%), Total (20%), CNPC (10%), and CNOOC (10%), at an auction held in October by the National Petroleum Agency (ANP). The consortium offered 41.65% of the excess oil to the Union, and paid a full signing bonus worth BRL 15 billion, of which BRL 6 billion regarding the portion we paid.

Participating in the ceremony were the minister of Mines and Energy, Edison Lobao; the general director of the National Petroleum Agency (ANP), Magda Chambriard; the CEO of Pre-Sal Petroleo SA (PPSA), Osvaldo Pedroza Junior; the CEO of CNPC Brasil Petroleo e Gas Ltda., Bo Qiliang; the Managing Director of Shell Brasil, Andre Lopes de Araujo; the general director for Total E&P do Brasil, Denis-Jacques de Besset; the CEO of the CNOOC group, Li Farong, and the proxy for CNOOC Petroleum Brasil Ltda, Sheng Jianbo.

Also attending were Chief of Staff Gleisi Hoffmann; the President of the Senate, Renan Calheiros, and our directors Jose Miranda Formigli (Exploration and Production) and Jose Alcides Santoro (Gas and Power).

This was the first agreement signed under the production sharing system, inaugurated with Act No. 12,351, of December 2010, which provides for the hiring of exploration and production of oil and natural gas in pre-salt areas and activities in strategic areas.

The agreement calls for the block’s exploratory phase to last four years. During this period, the consortium will carry out the activities foreseen under the minimum exploratory program, which provides for 3D seismic surveys over the entire area of the block, the drilling of two exploration wells, and the completion of a long-term test.

The consortium must also fulfill a minimum percentage of overall local content in each phase of the project, as follows: 37% for the exploratory stage, 55% for the development of production systems expected to begin operating by 2021, and 59% for systems with first oil from 2022.

Graca Foster said the consortium’s governance model is currently being discussed, “so we can have permanent, highly efficient contact with the PPSA.” She completed: “We will work focusing on the profitability of the companies constituting the consortium on absolutely realistic bases, based on targets and indicators.”

Dilma Rousseff stressed that “the exploitation of Libra is a great deal for the companies”, and a project of great impact for Brazil. “The importance of this for the Brazilian state is enormous, since in the next 35 years we will have over BRL 1 trillion for Education and Health in Brazil,” she said.

The Libra block is located in ultra-deep Santos Basin waters, in the pre-salt polygon, and is considered of high potential. The block covers an area of 1547.76 square kilometers and was discovered with the drilling of well 2-ANP-0002A-RJS, in 2010.

We emphasize that estimates of recoverable oil volumes, costs, investments, and the production schedule for the block’s production systems will be disclosed in due time, in line with the progress made by the minimum exploratory program.