Exploratory assessment of the economic gains of a pre-salt oil field in Brazil

Abstract

In recent years, Brazil has made public several oil discoveries located in deep waters, below the salt layer. Discoveries are steadily enhancing national reserves and have brought the country into a new role in the global oil industry. This paper aims at investigating the economic gains that could be expected from a Brazilian oil field in the pre-salt region. Analyses were conducted based on the Libra field, the largest oil discovery in Brazil until now, with approximately 10 billion barrels. The results were calculated for different scenarios of oil prices, companies' arrangements and regulatory regimes. The findings suggest that economic gains could be higher for the Brazilian Government if the oil production were conducted under a service contract scheme. However, considering the current production-sharing regime in force for pre-salt areas, economic gains could be higher if a bidding process was conducted, ensuring for the Brazilian Government a higher participation in the oil to be produced. Additionally, the results demonstrate that under the current rules applied for the production-sharing regime, the government quota of oil has decreased over time, putting at risk economic results.