Global Oil & Gas Market Update Roadshow!

Brazil Oil and Gas on the way up – What canNORWEP do to support partners

Adhemar Freire, Brazil Country Manageradhemar.freire@norwep.com

Scandic Kristiansand Bystranda | 6 September 2017

Agenda

1. Country overview2. E&P overview3. Policies in place and impact on business4. Coming bid rounds5. Opportunities6. How NORWEP can support our partners7. Final Remarks

www.norwep.com

Country Overview

Country outlook - challenges

• Deep prolongued economic recession• Challenging fiscal imbalance• Political turmoil• Corruption scandal “lava jato” (car wash operation)• High unemployment rate• Complex legal and regulatory framework• Complex tax regime• Logistics challenges• Low oil price• Geopolitical risks

Country outlook - opportunities Lower inflation and interest rate (SELIC) Pre-salt fields production Petrobras turnaround Petrobras divestment plan Adjustments in legislation 9 bidding rounds scheduled (2017/2018/2019) Permanent offer of exploration areas Local content adjusted Program Gas para crescer “Gas to grow”

E&P Overview

Country E&P overview• Oi Production : 2.5 Mbpd• Gas Production: 101 Mm3/d• Reserves: Oil 12.7 Bbbl / Gas 378 Bm3

• Economic groups in E&P activities: 95• Foreign Companies: 48• Sedimentary Basins: 29• Exploratory Blocks: 311• Fields: 443• Wells: ~30.000• Offshore Production Platforms: 143

Country E&P overview – Oil Production

Country overview – Pre-salt

Source: ANP

Drastic Reduction in Activity

5 years without licensing bidding rounds

Policies in place and impact on business

National Policies in PlaceUpstream• E&P National Policy  • Onshore E&P Policy (Reate) – revitalization program      • Transfer of Rights Renegotiation• Local Content Policy • Tax Regime Renewal (Repetro)•   2017‐2019 Bidding Rounds • Unitization Agreements• Petrobras’ Right of First Refusal (Pre‐salt Operatorship)

Midstream• “Gas para Crescer” program (Gas to grow) o

Framework improvements with impact on business

Local Content review

New policy for the 14th bidding round and following

For previous round - negotiations on going (Public hearing)

Coming bid rounds

Bidding rounds already scheduled

2018 2019

Concession Bidding Rounds

Production Sharing Bidding Rounds

14th:  27 September

15th: May

16th: Q3

2nd and 3rd: 27 October

4th: May

5th: Q3

2017

14th Bidding Round (Concession)

• Scheduled for Sept, 27 ‐ 2017• 32 Oil Companies registered and approved to bid• 287 Exploratory Blocks• 11 Sedimentary Basins

5 Offshore6 Onshore

• Lower local content percentage• Opportunities for new comers as operators (Exxon, e.g.)

Production Sharing Contract bidding round - Pre-salt

• Carcará – estimated in place volumes: 2,2 Bbbl (exploration phase)• Gato do Mato (exploration phase)• Sapinhoá (in production: 25.000 bbld• Tartaruga Verde (under development; first oil in 2017)

Areas to be unitized

New areas• Alto de Cabo Frio Oeste• Alto de Cabo Frio Central• Pau Brasil – unrisked in place volumes: 4.1 Bbbl• Peroba – unrisked in place volumes: 5.3 Bbbl

Opportunities

Several impediments to foreign investments lifted – Offshore market to grow by 3% p.a.

Source: Rystad Energy research and analysis

1

Offshore market in Brazil 2012-2021USD billion

0

5

10

15

20

25

30

35

40

45

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

OperationsWellSubseaEPC and Topside EquipmentReservoir and Seismic

Number of wells expected to double towards 2021 driven by exploration activity

2

0

30

60

90

120

150

180

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Exploration

Wet

Dry

Offshore wells in Brazil 2012-2021Number of wells

Green and mature fields opportunities

Several opportunities in the OPEX

Source: Petrobras

Petrobras Business Plan – 19 new Production Units

Source:  Petrobras Strategic Business and Management Plan 2017‐2021

Mb/

d

Producers Other Operators2017

O&G Companies Operating in Brazil

How NORWEP can support our partners

Deliveries

Assist companies to explore opportunities with Petrobras – Strategic andPlanning

On going Seminar on Decommissioning and Late Maintenance ofOffshore assets in operation – Nov 6th

On going Network meeting with Statoil Supply Chain area – End ofOctober

FPSO for Sepia and Libra – we are working to promote partnerscapabilities to the chartering company to be contracted – in Houstonand Singapore

Assist companies with market assessment Under evaluation for 1H 2018 – Seminar on Digital Solutions

Final Remarks

Conclusions Companies must value the short term perspective but also the medium

and long term Local content rules must be analyzed on each specific situation and local

services and after sales must be considered in the Business Plan It has been developed a framework in order to create a better business

environment, with more transparency and predictability Risk management is still something to care, however you may get inspired

by foreign companies which have succeed in the Brazilian market Confidence in excess may be a mistake, but pessimism will not bring you

to the business Brazil is the biggest offshore market in the years to come

norwep.com

Adhemar Freire, Brazil Country Manageradhemar.freire@norwep.comKristiansand | 6 Sept 2017