Petrobras signs $2.2 bln agreement with France's Total

This Wednesday (Dec. 21) Petrobras signed a Marster Agreement with the French oil company Total, in connection with the Strategic Alliance. The transaction has a global estimated value of $2.2 billion, including cash, contingent payments, and the carry of investment in the production development of common assets to both companies, to be paid by Total to Petrobras and its subsidiaries as appropriate. The company will receive $1.6 billion in cash.

"What do we want with this program, besides the strategic advantages of this specific case? Our goal is to have funds to help pay our debts and reduce our indebtedness,” said Petrobras CEO Pedro Parente, who was next to Total CEO Patrick Pouyanné during the press briefing.

Business and Management Plan

The teams from both companies are working on the Sale and Purchase Agreements (SPAs) related to the assets from this Master Agreement and they have a mutual commitment to make all the necessary effort to sign all the contracts within 60 days.

Petrobras considers that entering into strategic partnerships is an important part of its 2017-2021 Business and Management Plan, because, according to the company, it contributes to the mitigation of risks, the strengthening of corporate governance, and the sharing of information, experiences and technologies, in addition to improving financeability of the company through cash inflows and release of investments.

The Petrobras CEO said that this agreement cannot be questioned by Brazil's Audit Court (TCU) on the company's divestment plan, with a goal of $4.5 billion for the biennium 2015-2016. "As it is a strategic partnership, we are showing very clearly that it has quite different characteristics from any divestment." According to Parente, "this is not a final contract—that's the so-called Master Agreement—and when we sign the contracts that firmly establish this partnership, the documents will be submitted to control authorities, including the TCU," he said.

New Projects

For Total CEO Patrick Pouyanné, this is a great partnership and it raises the possibility of attracting to Petrobras the investment that the French company makes abroad. One of their projects of joint activity is in the Perdido Foldbelt area, in the Mexican Gulf of Mexico, acquired by Total in the bidding round for deepwater drilling. 

Petrobras has a deadline to decide to join the project. "We have one year to decide whether we want to take a 20% stake in this project at no cost. This is another benefit of the strategic strategic partnership. Total would certainly not give us this opportunity in another situation," Parente said.

The Petrobras CEO pointed out that Total is one of the most important global oil and gas exploration companies in fields that present similar geological characteristics as the ones of deepwater drilling of Petrobras and, for that reason, it has a very strong strategic component, which is to share experiences and reduce the risks faced by an industry in which the return on invested capital can take up to 25 years. 

Under the agreement, Petrobras will not need to make disbursements and will even receive important resources for the company to reduce debt. The two companies will become partners in Iara and Lapa fields, in the Santos Basin pre-salt, and in two thermal plants, sharing the use of the regasification terminal infrastructure located in Bahia state. Petrobras and Total are already jointly participating in 19 exploration and production consortiums in Brazil and abroad. One of them is in the Libra pre-salt area, in addition to others in the Espírito Santo Basin and Pelotas Basin. The companies are also partners in the Bolivia-Brazil gas pipeline.

 
Translated by Amarílis Anchieta