Qatar Petroleum International (QPI) and Shell yesterday signed a memorandum of co-operation in support of their new international upstream partnership in Brazil.
The agreement follows QPI’s $1bn purchase in April 2014 of a 23% stake in a major oil production asset, offshore Brazil operated by Shell known as BC-10 or Parque das Conchas.
The deal was signed in the presence of HE the Minister of Energy and Industry Dr Mohamed bin Saleh al-Sada, who is also the chairman of Qatar Petroleum, and Royal Dutch Shell CEO Ben van Beurden.
The agreement was signed by QPI chief executive officer Nasser al-Jaidah and Qatar Shell Companies managing director and chairman Wael Sawan.
On the BC-10 deal, al-Jaidah said: “QPI is extremely pleased to have strategically expanded and strengthened our international investment portfolio through this agreement. With our long-term partner, Shell, QPI offers valuable support for the progressed development of BC-10.”
Sawan said the opportunity represented a major achievement in the two companies’ partnership. “We are especially pleased to be jointly involved with QPI in this pioneering offshore development,” he said.
“The opportunity represents a major achievement in our long-term partnership with Qatar Petroleum. Together, we have built two of the world’s largest energy projects: Pearl GTL and Qatargas4. In the near future we hope to reach a final investment decision for the Al Karaana Petrochemicals project, another groundbreaking joint venture between QP and Shell.”
BC-10 is producing around 50,000 barrels of oil equivalent a day (boe/d). Since coming on-stream in 2009, BC-10 has produced more than 80mn boe.
Phase 2 of the project, to tie-in the Argonauta O-North field, came online on October 1, 2013, with an expected peak production of 35,000boe a day.
A final investment decision for a Phase 3 of the BC-10 project was taken in July 2013 and once online is expected to reach a peak production of 28,000boe a day.
BC-10 represents a milestone in the development and commercialisation of Brazil’s deep-water oil. Three fields in the Campos basin have been developed with subsea wells and manifolds, with each field tied back to the heart of Parque das Conchas (BC-10) - a centrally located Floating Production Storage and Offloading (FPSO) vessel moored in around 1,780m of water.
In December 2013, Shell acquired an additional 23% interest in BC-10 for approximately $1bn resulting from a buy-out of Petrobras’ interest in the project. Petrobras is the national oil company of Brazil.
This transaction raised Shell’s total interest in BC-10 to 73%. India’s Oil and Natural Gas Corporation Limited (ONGC), previously holding a 15% working interest, acquired an additional 12% interest.
In December 2013, Shell also entered into an agreement with QPI to on-sell for approximately $1bn the additional 23% interest Shell acquired. The sale was officially completed on April 30, 2014.
Following the latest transaction, Shell continues as operator and as a 50% equity owner, with ONGC holding a 27% interest and QPI holding 23%.
This transaction represents an important milestone and complements an already thriving partnership between Shell and QPI that dates back to 2007 when the two parties signed an MoU aimed at identifying and developing international projects of mutual interest throughout the energy chain.
In 2009, QPI became a shareholder in two Shell chemical joint ventures in Singapore. In 2012, Shell and QPI signed a deal to develop a major refining complex in China.
The latest deal regarding BC-10 represents QPI’s first upstream investment in Latin America, adding to the company’s expanding portfolio across the energy chain in five continents.