Partnerships and JV are quite common in the Oil and Gas industry. In the offshore activity, in order to reduce the risks of capital intensive projects oil companies used cooperate entering into JV agreements. In addition, local content requirements and entry barriers in new markets, are some reasons to create partnerships between international and domestic companies. Brazil is not different. It is a market that has some challenges in which the cooperation with a local partner could reduce the risks for a foreign investor. In the oil companies’ side, Petrobras is the target partner for an international oil company, because of its technical reputation and successful implementation of ultra-deep operations. In other segments, Petrobras, can be the main client, sole supplier or big competitor. Petrobras is subject also to laws and regulations to hire contractors, there are local content requirements regulations, industry-specific tax, fiscal and customs regimes, among other risks and opportunities in which the cooperation with a domestic company could help to solve in a more efficient way. The author of this paper describes the advantages of the partnership for international and domestic companies which want to invest in Brazil in the several perspectives along the oil and gas supply chain.
Capital-intensive projects are inherent to the oil industry, which requires large upfront capital expenditure and long-term paybacks. Diversification strategies are regularly used by oil companies to avoid high exposure to big projects and their geological, fiscal, cost, and political risks. Amongst such risks, oil price plays a pivotal role as the main variable driving project returns. The purpose of this paper is to analyze these risks, with a special emphasis on oil price, and propose a systematic method to manage a balanced portfolio, considering different risks and diversification strategies. Oil companies must assess the size of their bets in exploration and development, evaluate farm-ins and farm-outs, invest in potentially disruptive energy sources, and downstream integration. These combined alternatives must target a portfolio with diversified maturity that leads to a varied temporal price exposure and long-term financial robustness. The model proposed in this paper lays out a reference portfolio based on a typical selection of projects. Projects are classified as a family, its members, and financial structure. Each family must have enough breadwinners to sustain the other members, investing in the future of the kids, and complement the retired members’ income. This model offers companies a reference to consciously select a strategy according to their higher or lower risk profile.
Brazil is one of the most prominent oil and gas offshore market. Recently, investors’ interest has increased, but not only because of the oil price recovery and pre-salt discoveries, but maybe also because of important changes in the regulatory side. Several issues have been discussed by authorities with the industry: local content flexibilization, unitization agreements, multiple fiscal regimes (PSA, Concessions, and Transfer of Rights Agreements), Repetro customs regime, decommissioning regulations, among other topics. To understand this environment is important to look at the changes and the history since the beginning, besides the economic and political forces which influence the decisions. In addition, Brazil 2018 elections have changed the direction and perspectives for this important economic sector. In this paper, the authors describe the evolution of the regulation, the contract models and results of bid rounds in order to tracking the effects of the past decisions. It can help to find clues about which should be the next steps in terms of new regulations for the Brazilian market.
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