#1ESPÍRITO SANTO OIL & NATURAL GAS YEARBOOK 2022 FINDES SENAI observatóric POR VOCE, PELA INDUSTRIA, PELO ESPÍRITO SANTO PELO FUTURO DO TRABALHO da indústria#2Empty#3REALIZATION Federation of Industries of the State of Espírito Santo Cristhine Samorini - Chairperson National Service of Industrial Learning - Senai/ES Cláudio Marcassa - Regional Director Social Service of Industry - Sesi/ES Cláudio Marcassa - Regional Superintendent - Findes Federation of Industry of the State of Espírito Santo - Findes Roberto Campos de Lima - General Director Executive Management of the Industry Observatory - Sesi/ES and Senai/ES Marília Gabriela Elias da Silva - Executive Manager Technical Team Gabriela Vichi Abel de Almeida - Business Environment Manager Nathan Marques Diirr - Studies and Research Analyst Francisco Carlos Batistini Brunoro Junior - Studies and Research Analyst Graphic Design, Layout, Review and Illustration Curumim Vida Para Marcas [Life For Brands] Text Review and Translation Brazil Translations Business Environment Management of the Industry Observatory Av. Nossa Senhora da Penha, 2053, 3rd floor, Saint Lucia, Vitória, ES, ZIP Code: 29.056- 913 (27) 3334-5626 www.portaldaindustria-es.com.br SUPPORT: Fórum Capixaba de Petróleo, Gás e Energia 4 ibp INSTITUTO BRASILEIRO DE PETRÓLEO E GÁS SEBRAE ONIP Organização Nacional da Indústria do Petróleo OBSERVATORY OF INDUSTRY. 2022-. Yearbook of the Oil Industry in Espírito Santo. - Vol. 6. Espírito Santo: Industry Observatory, 2023. Annual. ISSN 2595-9255 1. Oil and Gas. 2. Espírito Santo. 3. Industry. 4. Industrial Development. 5. Energy. CDU: 67 (815.2) OPENING LETTER The Yearbook of the Oil and Natu- ral Gas Industry in Espírito Santo reaches its 6th edition and brings an important diagnosis about the exploration, production and the en- tire chain that this sector moves. - In fact, more than that, the doc- ument produced by the Findes Industry Observatory - anticipates scenarios and presents fundamen- tal projections to understand where the segment is heading. With a share of 4.6% in the state's GDP and a weight of 20% in indus- try, the sector directly employs about 12,000 workers and has more than 520 active companies. In addition, it is an important reve- nue generator. In 2022, more than BRL 2.9 billion were collected in the State with royalties and special participations. The numbers give the dimension of the importance that the segment has for the State, but it is necessary to understand that we are talking about a finite input and that in the last five years it has gone through a decline in production. Still, the economic activity of this chain is thriving and many opportunities are projected for the State. Petrobras, Shell, Repsol, Equinor, Karavan Oil and Gas, ExxonMobil, Seacrest Petróleo, CNOOC Petroleum, Imetame, EnP, PRio, Vipetro, Petrosynergy, among oth- er oil companies are preparing investments, which to- gether exceed BRL 8.8 billion by 2027. With these businesses, oil production, which fell 34.6% from 2021 to 2022, should reverse the downward curve and the forecast is that there will be an average annual increase of 10.2% until 2027. That is, we have to take advantage of the opportunities that pass through the investments already announced, the process of permanent offer of oil fields, Petrobras' divestment plan and also the decommissioning of platforms. Alongside them, we need to prepare for a transition of the energy matrix. We, the productive sector, the Gov- ernment and other entities in the sector, have to lever- age opportunities and maximize projects that can ad- dress us for a more sustainable and developed State. In this context, the Capixaba [belonging to the state of Espírito Santo] Oil and Gas and Energy Forum has played an important role. By bringing together the main players in the sector, through qualified discussions, the Forum contributes to strengthening the energy seg- ment of Espírito Santo. If we are strategic and carry out joint planning - and this Yearbook is a very rich tool in this process we will be able to attract more businesses that diversify our activ- ities and make us a reference to the world, in addition to developing projects that target the energy transition. Enjoy your reading! Cris Samorini Chairperson of Findes#4PRESENTATION Marília Gabriela da Silva Observatório da Indústria Executive Manager After six consecutive years of fall- ing oil and natural gas production in Espírito Santo, the year 2023 rescues a scenario of optimism for the future. The fundamental piece that supports this statement aris- es in the recent announcements of investments in offshore areas that lead to an increase in the pro- duction of inputs in the short term. In the onshore environment, opti- mism appears in the recent diver- sification of operators that with results still isolated, demonstrate that the model with more indepen- dent companies operating in Explo- ration and Production (E&P) is the most prosperous path. According to the ANP, in Espírito Santo more than 120 wells were passed on to private operators in 18 onshore exploration fields that account for an approximate volume of 3,000 boe/day. When we com- catalyst for the regional socioeconomic development of producing municipalities, especially in the genera- tion of employment and income. It is in this context that the 6th edition of the Yearbook of the Oil and Natural Gas Industry in Espírito Santo brings together the most important variables of anal- ysis of the sector for Espírito Santo, combining the technical rigor and structured, updated and reliable information. The first chapter of the Yearbook addresses the glob- al oil and natural gas industry. Chapter 2 exposes the oil and natural gas industry in Espírito Santo. The eco- nomic effects of these activities are dealt with in chap- ter 3. Finally, chapter 4 discusses the new opportuni- ties in exploration and production of oil and natural gas for Espírito Santo. The Industry Observatory reaffirms its commitment to the sector and to the industry of Espírito Santo, and also keeps updated the Panel - Oil and Gas Industry - which contains the most relevant data of the sector in digital, intuitive and dynamic format. pare the average production vol- Enjoy your reading! umes before and after the divest- ment of these areas by Petrobras, it is possible to see that 83.3% of these fields registered an increase in oil and natural gas production in the first twelve months of operation of the new companies. → SCAN ME ACESSE AQUI O PAINEL - INDÚSTRIA DO PETRÓLEO E GÁS There is no questioning about the benefits caused by increased com- petition in the exploration and pro- duction of oil and natural gas. On- shore production is an important SCAN ME ACCESS THE ENGLISH EDITION OF THE DO- CUMENT HERE#5SUMMARY INDEX OF CHART, TABLE AND FIGURES_ 10 1. INTERNATIONAL PANORAMA 1.1. Overall energy consumption_ ESPÍRITO SANTO, PROTAGONISM IN DIVERSIFIED PRODUCTION OF OIL & GAS FROM ONSHORE TO PRE-SALT 12 2.6. Production projection. 13 1.2. Global production and consumption of oil and natural gas_ 15 1.3. Global oil and natural gas reserve 1.4. Global Oil Capacity and Refining_ OIL AND GAS INDUSTRY PAYS ATTENTION AND INVESTS IN ENERGY TRANSITION 2.6.1. Projection of offshore production in Espírito Santo_ 2.6.2. Projection of onshore production in Espírito Santo_ 18 3. ECONOMIC REFLECTIONS 20 37 39 39 111111 41 44 3.1. Companies and jobs in the productive chain of the O&G sector_ 45 45 21 3.2. Government Revenues 48 2. EXPLORATION AND PRODUCTION OF OIL AND NATURAL GAS IN ESPÍRITO SANTO 2.1. Drilling activity in Espírito Santo_ 2.2. Hydrocarbon declarations_ 24 3.3. External sector_ 3.4. Research, Development and Innovation (ANP RD&I Clause)_ 4. OPPORTUNITIES FOR ESPÍRITO SANTO 25 26 4.1. Announced Investments_ 2.3. Declarations of commerciality_ 27 2.4. Oil and natural gas reserves_ 29 29 2.4.1. Offshore reserves in Espírito Santo_ 29 4.2. Sale of O&G assets_ 4.3. Permanent Offer_ 4.4. Facility Decommissioning_ 2.4.2. Onshore reserves in Espírito Santo. 31 2.5. Total oil and natural gas production_ 32 GLOSSARY 2.5.1. Offshore oil and natural gas production_ 33 33 2.5.2. Onshore oil and natural gas production_ 35 REFERENCES 50 53 33 99 56 57 58 60 62 42 99 66 70 70#6INDEX OF CHART, TABLE AND FIGURES CHART INDEX Chart 1 Countries with the highest primary energy consumption (in exajoules) – 2021 14 Chart 2 Share of fuels in the global energy matrix (in % and in exajoules). Chart 24 Projection of onshore natural gas production in Espírito Santo (in millions of m³)_ 42 15 Chart 3 Oil production and consumption in the world (thousand barrels/day). 16 Chart 25 Employees in the productive chain of the O&G sector in Espírito Santo 46 Chart 26 Revenue from government participations (royalties and SP) in Espírito Santo (BRL million) 49 Chart 4 Production and consumption of natural gas in the world (billions of m³)_17 Chart 5 Proven world oil reserves (billions of barrels) 18 Chart 27 Oil exports in Espírito Santo (in USD million FOB) and share of oil exports in total exports of Espírito Santo (in %) _50 Chart 6 Natural gas reserves in the world (trillions of m³)_ 19 Chart 28 Platform Decommissioning Program (PDI) Projects that received resource from the RD&I clause in Espírito Santo (in units). 54 Chart 7 Oil Capacity and Refining in the world (thousand barrels/day). Chart 8 Wells drilled in Espírito Santo (in units) 20 Chart 29 Facility Decommissioning Program (PDI) by basin (in units) 63 26 Chart 9 Statements of hydrocarbon evidence in Espírito Santo (in units). Chart 10 Statements of commerciality in Espírito Santo (in units) 27 TABLE INDEX 28 Table 1 Companies in the productive chain of the O&G sector in Espírito Santo (in units) 45 Chart 11 Offshore oil reserves in Espírito Santo (in millions of barrels). Chart 12 Offshore natural gas reserves in Espírito Santo (million m³)_ Chart 13 Onshore oil reserves in Espírito Santo (in millions of barrels). Chart 14 Onshore natural gas reserves in Espírito Santo (million m³) Chart 15 Total oil production in Espírito Santo (thousand barrels)_ Chart 16 Total natural gas production in Espírito Santo (million m³) 30 30 31 Table 2 Employees in the productive chain of the O&G sector in Espírito Santo_____46 Table 3 Characteristics of the labor market in the productive chain of the O&G sector in Espírito Santo - 2021. 47 32 Table 4 Revenue from government participations (royalties and SP) in Espírito Santo (BRL million) _50 33 Table 5 Exports of the O&G sector in Espírito Santo (USD million) 52 33 Table 6 Imports from the O&G sector in Espírito Santo (USD million) 52 Chart 17 Offshore oil production in Espírito Santo by location (thousand barrels) _34 Chart 18 Offshore natural gas production in Espírito Santo by location (million m³)_35 Chart 19 Onshore oil production in Espírito Santo (thousand barrels). Table 7 Top investment projects announced in the O&G sector in Espírito Santo for the next 5 years 58 36 Table 8 Monitoring the sale of Petrobras assets in Espírito Santo_ 59 Chart 20 Onshore natural gas production in Espírito Santo (million m³) 36 Table 9 List of Decommissioning Programs (PDI) approved in the State of Espírito Santo_ 64 Chart 21 Projection of offshore oil production in Espírito Santo (thousand barrels) 40 INDEX OF FIGURES Chart 22 Projection of offshore natural gas production in Espírito Santo (in millions of m³). 40 Figure 1 Exploratory blocks on offer in the Permanent Offer in Espírito Santo 61 Chart 23 Projection of onshore oil production in Espírito Santo (thousand barrels) 42 Figure 2 Exploratory blocks under study in the Permanent Offer in Espírito Santo_61 Figure 3 Areas with marginal accumulations under study for Permanent Offer_ 62#7CHAPTER 1 | INTERNATIONAL PANORAMA Chapter 1 INTERNATIONAL PANORAMA 1.1 Overall energy consumption In 2021, global primary energy consumption was 595 exajoules, 5.5% higher than in the previous year The increase can be attributed, above all, to the resumption of glob- al economic activity, overcoming the most critical period of the new Coronavirus pandemic. Global energy consumption is cen- tralized in a group of ten countries (chart 1) that together concentrate 67% of the total energy consumed in the world. Only China and the United States account for 42.1% of the total energy consumed in the world. China's energy matrix is made up of the following sources: coal (54.7%), oil (19.4%), natural gas (8.6%), hy- droelectric (7.8%), renewable energy (7.2%) and nuclear energy (2.3%). The United States' energy matrix is composed of: oil (38.0%), natural gas (32.0%), coal (11.4%), nuclear energy (8.0%), renewable energy (8.0%) and hydroelectric (2.6%). 67% 42.1% of global energy consump- tion is concentrated in a group of ten countries of energy consumed in the world is concentrated in Chi- na and the United States 13 13#814 YEARBOOK OF THE OIL AND NATURAL GAS INDUSTRY IN ESPÍRITO SANTO 2022 CHAPTER 1 | INTERNATIONAL PANORAMA Chart 1 - Countries with the highest primary energy consumption (in exajoules) - 2021 157.6 93.0 ■........ 35.4 31.3 17.7 13.9 12.6 12.6 12.6 12.2 China United India Rússia Japan States Canada Germany South Korea Brazil Iran Source: BP Statistical Review of World Energy | Elaboration: Industry Observatory/Findes. 15 of total natural gas consumption dia accounted for 40.9% of total oil worldwide. consumption worldwide. It is note- worthy that despite the growth of renewable sources, in 2021, fossil fuels still represented 82.3% of the world's energy sources. Finally, oil held a 38.8% share of the global energy matrix in 2001 and, in 2021, reduced to 31.0%. The United States, China and In- Chart 2 - Share of fuels in the global energy matrix (in % and in exajoules) 0.7% 2.3% 7.0% 6.7% 6.7% 6.7% 4.9% 6.8% 4.3% 25.0% 30.4% 26.9% Renewable energy Hydroelectricity 21.8% 22.4% 24.4% Nuclear Energy Coal Natural Gas Oil Division of oil production in the world: Middle East 31.3% North 26.6%% America CEI 15.4% Asia: 8.2% Africa: 8.1% South and Central America: 6.6% Europe: 4.0% 24.4% of the total primary energy consumed in the world in 2021 came from natural gas Over the past 20 years, the world's primary energy consumption has grown by an average of 1.3% per year. The highlight for the period was the increased participation of renew- able energy sources in the energy matrix. In 2001, renewable sources represented 0.7% and in 2021 they rose to 6.7% of the total energy con- sumed in the world (chart 2). The growth in the consumption of these sources was present in regions with a greater share of total primary en- ergy consumption, especially China and the United States. In turn, fossil fuels have grown more discreetly. In 2001, coal represented 25.0% of the total primary energy consumed in the world and in 2021 it rose to 26.9%. China, India and the United States concentrated 73.0% of total coal consumption worldwide. China and the United States have reduced the share of coal in total en- ergy consumption in each country, while India has increased the share of coal in total primary energy con- sumption. It is well known that coal is one of the most polluting energy sources and yet its consumption in the last 20 years has not yet been contained. Natural gas, which represented 21.8% of the total primary energy consumed in the world in 2001, rose to 24.4% in 2021. The consumption of natural gas represents an alterna- tive in the transition to energy pro- duction with less polluting sources. As renewable sources are not yet available on a large scale, the use of natural gas becomes strategic due to production infrastructure, flow, treatment and regasification. In addition, the input is less pollut- ing than oil and coal, contributing to the decarbonization of the ener- gy sector. The United States, Rus- sia and China accounted for 41.6% 38.8% 33.4% 31.0% 2001 2011 2021 Source: BP Statistical Review of World Energy | Elaboration: Industry Observatory/Findes. 1.2. Global production and 3.0 million barrels of oil per day were produced in Brazil in 2021, consumption of oil and natural gas which puts the country in World oil production in 2021 was 89.9 million barrels per day¹, 1.6% higher than in 2020 (chart 3), repre- senting an increase of 1.4 million bar- rels per day in production in absolute numbers. Despite the increase, oil production in the world has not yet recovered to the level produced in 2015 and is far from the record pro- duction in 2018, when 94.9 million barrels per day were produced. 1. In this session it was adopted as a "barrels of oil per day" metric. In 2021, the division of oil produc- tion among regions in the world was: Middle East (31.3%), North America (26.6%), Common- wealth of Independent States² (15.4%), Asia (8.2%), Africa (8.1%), South and Central Ameri- ca (6.6%) and Europe (4.0%). The main producing countries were the United States, Saudi Arabia and Russia, which together ac- 2. Member countries: Armenia, Azerbaijan, Be- larus, Kazakhstan, Moldova, Kyrgyzstan, Russia, Tajikistan, Turkmenistan, Ukraine and Uzbekistan. 9th position in the global ranking 24.3 billion m³ of natural gas were produced in Brazil in 2021, which puts the country in the 30th position of the global ranking#916 YEARBOOK OF THE OIL AND NATURAL GAS INDUSTRY IN ESPÍRITO SANTO 2022 Chart 3 - Oil production and consumption in the world (thousand barrels/day) 110,000 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 Production Consumption Source: BP Statistical Review of World Energy | Elaboration: Industry Observatory/Findes. 2019 2020 2021 CHAPTER 1 | INTERNATIONAL PANORAMA Chart 4 Production and consumption of natural gas in the world (billions of m³) 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Production Consumption Source: BP Statistical Review of World Energy | Elaboration: Industry Observatory/Findes. Division of oil consumption in the world: Asia North America Europe 38.1% 23.7% 14.4% Middle East: 9.2% South and Central America: 6.0% CEI: 4.6% Africa: 4.2% count for 42.8% of global pro- duction. Brazil is the 9th country with the highest production of the input in the world, with 3.0 million barrels per day. In 2021, 94.1 million barrels per day were consumed worldwide, 6.0% higher than in the previous year (chart 3), which represents the largest percentage increase among consecutive years since 1976. The significant increase can be explained by the resumption of global economic activity after the most critical period of the new Coronavirus pandemic. The division between the regions in the world took place as fol- lows: Asia (38.1%), North America (23.7%), Europe (14.4%), Middle East (9.2%), South and Central America (6.0%), Commonwealth of Independent States (4.6%) and Africa (4.2%). The main consumer countries were the United States, China and India, which together account for 41.5% of global con- sumption. Brazil is the 8th coun- try with the highest consumption of the input in the world, with 2.3 million barrels per day. Regarding natural gas, global pro- duction reached 4.0 trillion m³ in 2021 (chart 4). This input's pro- duction increased by 175.4 billion m³ from 2020 to 2021, which rep- resents an increase of 4.5% and resumes the interrupted growth trend between 2019 and 2020, reaching the highest value of the series in the last year. The division of natural gas production among regions in the world was: North America (28.1%), Commonwealth of Inde- pendent States (22.2%), Middle East (17.7%), Asia (16.6%), Africa (6.4%), Europe (5.2%) and South and Central America (3.8%). The main producing countries were the United States, Russia and Iran, which together account for 46.9% of global production. Brazil is the 30th country with the highest pro- duction of the input in the world, with 24.3 billion m3 of natural gas. The consumption of natural gas in the world in 2021 was 4.0 tril- lion m³, an amount 5.0% higher than in the previous year. The division of natural gas con- sumption among regions in the world was: North America (25.6%), Asia (22.7%), Common- wealth of Independent States (15.1%), Middle East (14.3%), Europe (14.1%), Africa (4.1%) Division of natural gas production in the world: North America 28.1% CEI 22.2% 17.7% Oriente Médio Asia: 16.6% Africa: 6.4% Europe: 5.2% and South and Central America South and Central America: 3.8% (4.0%). The United States, Russia and China account for 41.6% of global natural gas consumption. Brazil is the 24th country with the highest consumption of the input in the world, with 40.4 billion m³ of natural gas. Division of natural gas consumption in the world: North America Asia 25.6% 22.7% CEI 15.1% Middle East: 14.3% Europe: 14.1% África: 4.1% South and Central America: 4.0% 17#1018 YEARBOOK OF THE OIL AND NATURAL GAS INDUSTRY IN ESPÍRITO SANTO 2022 CHAPTER 1 | INTERNATIONAL PANORAMA 11.9 billion barrels of oil is Brazil's oil reserve in 2020, which puts the country in 16th. position in the global ranking 1.3. Global oil and natural gas reserve With regard to global oil and natural gas reserves, it is worth mentioning that the available data did not receive updates for the year 2021, so the most recent elements refer to 2020. stable compared to 2019, with a slight decrease of 0.1% (chart 5). In absolute terms, the reduction was 2.4 billion barrels. It should be not- ed that the last significant variation was in 2017 when there was an in- crease of 37.9 billion barrels of oil in The world's total oil reserves in 2020 were 1.73 trillion barrels, practically global reserves. Chart 5- Proven world oil reserves (billions of barrels) rope (1.7%). Russia, Iran and Qatar accounted for 50.1% of the world's total natural gas reserves. Brazil is the 33rd country with the largest re- serve in the world, with 348.5 billion m³ of natural gas. Chart 6 - Natural gas reserves in the world (trillions of m³) 200 180 160 140 120 100 80 60 40 20 0 19 19 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 - 2011 2012 2013 2014 2015 2016 Source: BP Statistical Review of World Energy | Elaboration: Industry Observatory/Findes. 44.4% of the world's oil reserves are concentrated in Venezuela, Saudi Arabia and Canada The division of oil reserves among the regions of the world was: Mid- dle East (48.3%), South and Central America (18.7%), North America (14.0%), Commonwealth of Inde- pendent States (8.4%), Africa (7.2%), Asia (2.6%) and Europe (0.8%). Vene- zuela, Saudi Arabia and Canada ac- counted for 44.4% of the world's oil reserves. Brazil is the 16th country with the largest input reserve in the world, with 11.9 billion barrels of oil. 2017 2018 2019 2020 Regarding natural gas, in 2020 re- serves reached 188.1 trillion m³, 1.2% lower than in the previous year. absolute terms, the drop was 2.2 trillion m³ of natural gas (chart 6). The division of natural gas reserves among the regions in the world was: Middle East (40.3%), Commonwealth of Independent States (30.1%), Asia (8.8%), North America (8.1%), Africa (6.9%), South and Central America (4.2%), and Eu- 2017 Source: BP Statistical Review of World Energy | Elaboration: Industry Observatory/Findes Division of natural gas reserves in the world Middle East Division of oil reserves in the world Middle 48.3% 40.3% East Central America 18.7% CEI 30.1% 14.0% Asia 8.8% 348.5 billion m³ is Brazil's natural gas reserve in 2020, which puts the country in 33rd position in the global ranking South and North America CEI: 8.4% Africa: 7.2% Asia 2.6% Europe: 0.8% North America: 8.1% Africa: 6.9% Asia: 2.6% South and Central America: 4.2% Europe: 1.7%#1120 20 YEARBOOK OF THE OIL AND NATURAL GAS INDUSTRY IN ESPÍRITO SANTO 2022 1.4. Global Oil Capacity and Refining The world's installed refining ca- pacity was 101.9 million barrels per day in 2021. There was a reduction America (6.3%) and Africa (3.2%). The United States, China and Rus- sia concentrate 41.0% of oil refining Oil refining capaci- of 419,500 barrels per day, repre- capacity worldwide. Brazil is the ty in the world senting 0.41% less than in the pre- 9th country with the highest refin- vious year. Asia 35.8% North America World oil refining was 79.2 million 21.1% barrels per day in 2021. There was Europe 14.8% Middle East 10.6% CEI: 8.3% South and Central America: 6.3% Africa: 3.2% an increase of 3.6 million barrels re- fined per day refined in the world, 4.8% higher than in the previous year (chart 7). The refining capacity among the regions in the world were: Asia (35.8%), North America (21.1%), Eu- rope (14.8%), Middle East (10.6%), Commonwealth of Independent States (8.3%), South and Central Chart 7- Oil Capacity and Refining in the world (thousand barrels/day) 110,000 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 | Production Consumption Source: BP Statistical Review of World Energy | Elaboration: Industry Observatory/Findes. ing capacity in the world, with 2.3 million barrels per day. Oil refining was divided as follows among the regions of the world: Asia (37.3%), North America (22.1%), Eu- rope (14.5%), Middle East (10.8%), Commonwealth of Independent States (8.5%), South and Central America (4.5%) and Africa (2.3%). The United States, China and Russia account for 44.6% of the world's oil refining. Brazil is the 9th country with the largest oil refining in the world, with 1.8 million barrels per day. 2016 2017 2018 2019 OIL AND GAS INDUSTRY PAYS ATTENTION AND INVESTS IN ENERGY TRANSITION ibp INSTITUTO BRASILEIRO DE PETRÓLEO E GÁS Roberto Ardenghy | Chairperson of the Brazilian Institute of Oil and Gas (IBP) Fernanda Delgado | Corporate Executive Director of the Brazilian Institute of Oil and Gas (IBP) In a scenario where climate change is increasingly demanding solutions, the energy sector is moving in line with global efforts for a low-carbon econ- omy. This is certainly one of the sectors that can contribute the most to achieving the goals of re- ducing greenhouse gas emissions. The energy transition is a path of no return, but it is a complex process and surrounded by challenges. In view of this context, it is of great importance to highlight that the oil and natural gas sector, con- trary to what is often suggested by common sense, can be configured as an important ally for the en- ergy transition process. This is because the most current approaches to this process must cover not only the issue of decarbonization, but also aspects related to the security of energy supply and eco- nomic and social development. Therefore, the contribution of the oil and natural gas sector to the energy transition process can take place from different perspectives, including technological development and technical expertise, the use of infrastructure, the financing capacity of projects focused on low carbon energies and also aspects related to energy security and economic and social development. Energy security is an issue that has been gaining in- creasing importance due to the recent energy crisis caused by the conflict between Russia and Ukraine and its striking effects, especially for the European continent that has lived for months with fears related to energy supply during the winter. This issue also be- comes especially sensitive in the midst of the quest for decarbonization. The wind and solar photovolta- ic source lead the energy transition process, but are subject to generation variability due to climatic con- ditions such as low incidence of solar rays or the ab- sence of winds. Thus, the performance of the oil and natural gas sector remains necessary to guarantee the supply of energy to the population. The importance of these sources is necessary even in the case of Brazil, which stands out for its energy matrix with a participation of more than 40% from renewable sources, with great emphasis on hydro- electric plants. In times of unfavorable weather condi- tions as observed in 2021 during the period of water scarcity, the activation of thermoelectric plants was fundamental to ensure that electricity reached the consuming units. Another important contribution of the oil and natural gas sector concerns its developments in socioeco- nomic terms. According to the Brazilian Institute of Oil and Gas (IBP), the sector will attract another USD 180 billion, from 2022 to 2031 in Exploration & Pro- duction (E&P) activities. With this, it can generate a collection of more than USD 600 billion for govern- ments, in addition to providing 400,000 more jobs on average per year. With more than 800 million barrels of proven oil reserves and about 20 billion m³ of prov- en natural gas reserves, Espírito Santo also has the potential to enjoy the socioeconomic benefits asso- ciated with investments in oil and natural gas E&P activities. From the point of view of decarbonization, the per- formance of the oil and gas sector can be decisive in#12several aspects given its technical expertise, in addi- tion to the ability to gather the necessary resources for the financing of projects focused on low carbon energies. The International Energy Agency (IEA) estimates that 50% of the emissions reductions needed to achieve net-zero emissions by 2050 will come from technologies that are still under devel- opment. Without the support of the oil and natu- ral gas sector, these very important technologies for reducing emissions may not reach the level of maturity and supply structure necessary for their large-scale competitive adoption. This shows that there is still a long way to go and the oil and gas sector has a lot to contribute to this trajectory. This industry also has the expertise and infrastructure needed to drive other activities. Sev- eral initiatives for investments in low-carbon tech- nologies can be observed in oil and natural gas companies. In line with the Paris Agreement, these companies have committed to meeting carbon re- duction targets. Data from Goldman Sachs Global Investment Research show, for example, that large companies in the sector allocated, on average, 15% of their 2021 budgets to low-carbon sources, while in 2019, this percentage was 4%. A significant example of synergy between the oil and gas sector and renewable sources from the perspec- tive of technological development is offshore wind energy. Knowledge of the type of environment, instal- lations on floating bases and the adequacy of ma- terials and techniques are some of the examples of synergies between these two sectors. The extensive expertise in the maritime environment held by the oil and natural gas sector can be configured as an im- portant way to reduce expenses and take advantage of knowledge, especially with regard to the construc- tion and operation of assets in this environment. With 7,367 km of coastline and 3.5 million km² of maritime space, the country is able to be a prom- ising agent in wind generation also in an offshore environment, contributing to the consolidation of its position as one of the leaders in energy transi- tion. The Brazilian potential has already attracted the attention of investors. Data from the Brazilian Institute of Environment and Renewable Natural Resources (IBAMA) indicate that there are about 177 GW in offshore wind projects with an open en- vironmental licensing process in the agency, four projects located on the coast of Espírito Santo to- taling more than 5 GW in the region. Thus, Brazil is positioned as a strategic location for bringing together characteristics that place it in a privileged position in terms of energy transition, espe- cially in aspects involving existing synergies with the O&G sector for decarbonization. The relatively clean energy matrix gives the country a differentiated pro- file of its emissions: while in most countries the ener- gy sector is the largest responsible for emissions, in Brazil this role is in the agriculture and land use sec- tor. In addition, the country is also notable for having an oil production with carbon intensity around 18 kg CO2eq per barrel, lower than some of the main play- ers in the Middle East that reach carbon intensities of the order of 70 kgCO2eq per barrel. These characteristics make it possible for Brazil to con- tinue investing in the oil and natural gas sector and reap the rewards in socioeconomic terms without taking the country off the path of energy transition and decarbon- ization. In this way, the construction of a decarbonized future in the country goes through a path that should be paved with an important contribution from the oil and gas sector, especially with the use of the existing syner- gies between the sector and renewable sources. This does not mean, however, that there is not much work to be done ahead nor any challenges. The oil and natural gas sector is aware of its role in the process of decarbonizing the economy and its commitments in the transition. Increasingly, it will be necessary to invest, innovate, research new technologies, improve methods and form partner- ships and the sector has already been directing efforts to deliver a more resilient barrel of oil with lower CO2 emission rates. This path has already begun to be trodden and the willingness of com- panies in the sector to seek a better future walks in the same direction as the desires of society.#13CHAPTER 2 EXPLORATION AND PRODUCTION OF OIL AND NATURAL GAS IN ESPÍRITO SANTO 25 25 Chapter 2 EXPLORATION AND PRODUCTION OF OIL AND NATURAL GAS IN ESPÍRITO SANTO The physical configuration of the ex- ploration and production of oil and gas of the State of Espírito Santo, both on land and at sea, consists of 69 fields in the production phase and 4 fields in the development stage. In addition, the state has 34 exploratory blocks divided into two sedimenta- ry basins: part of the Campos basin and the entire Espírito Santo basin. In the confrontation with the Cam- pos basin, the state has 11 fields and 6 exploratory blocks. In the Es- pírito Santo basin there are 62 fields, 7 in the offshore part and 55 in the onshore part. Still in this last basin, there are 28 exploratory blocks, 10 in the offshore part and 18 in the on- shore part. In the state, 19 oil companies op- erate with fields in the production stage or in the production develop- ment stage. Among them, 7 foreign companies (CNOOC Petroleum Bra- sil, ExxonMobil Exploração Brasil, ONGC Campos, QP Brasil, Repsol Exploração Brasil, Seacrest and Shell Brasil Petróleo) and 12 national com- panies (3R Petroleum, BGM Petróleo e Gás, Capixaba Energia, IBV Brasil, Imetame, IPI, PRio, Petrobras, Petro- mais, Petrosynergy, Ubuntu Engen- haria and Vipetro Petróleo). Petrobras has the concession of the fields with the highest productivity in the state, such as the fields that make up Parque das Baleias. 2,341 wells have been drilled in Espírito Santo since 1959 2.1. Drilling activity in Espírito Santo The drilling activity is carried out during the exploratory phase, in which the oil company aims to discover oil and/or natural gas de- posits. In this step, the acquisition of seismic, gravimetric, magne- tometric, geochemical data and the drilling of the wells are carried out. The mapping of the evolution of well drilling is an indicator ca- pable of evaluating the explorato- ry level of the areas in confronta- tion with Espírito Santo. With the beginning of drilling activ- ity in 1959, Espírito Santo has al- ready recorded a total of 2,341 wells drilled, divided between onshore (75.7%) and offshore (24.3%). Be- tween 2002 and 2022, 642 onshore wells were drilled, with emphasis on the fields of Fazenda Alegre, In- hambu Jacutinga and Cancã. With the exception of the Jacutinga field, these areas make up the land fields with the highest production in the state. In 2021, 7 wells were drilled on land, 5 wells drilled by BGM in the Suindara field and in block ES-T-496, and 2 wells were drilled by Imetame in block EST-441 and in the Rio Ipi- ranga field. In 2022, the oil company BGM drilled 1 well, in block ES-T-496 and 2 wells in block ES-T-506. 642 onshore wells were drilled in Espírito Santo between 2002 and 2022 424 offshore wells were drilled in Espírito Santo between 2002 and 2022#1426 YEARBOOK OF THE OIL AND NATURAL GAS INDUSTRY IN ESPÍRITO SANTO 2022 CHAPTER 2 EXPLORATION AND PRODUCTION OF OIL AND NATURAL GAS IN ESPÍRITO SANTO The offshore drilling activity re- corded, between 2002 and 2022, a total of 424 drilled wells, with emphasis on the Jubarte, Golf- inho, Bloco BC-60 and Argonau- ta fields. In 2021, 6 wells were drilled at sea, 4 wells in Jubarte, 1 well in block ES-M-669 and 1 well in the Argonauta field. In Chart 8 Wells drilled in Espírito Santo (in units) 2022 Petrobras drilled 3 offshore wells: 1 well in the Jubarte field and 2 wells in block ES-M-596, belonging to the oil company's campaign for the Andurá and Jo- elho prospects. In 2023, the most recent period, Petrobras drilled 1 well in the Jubarte field. Chart 9-Statements of hydrocarbon evidence in Espírito Santo (in units) 30 26 25 25 22 21 20 20 18 18 17 17 16 15 15 14 14 13 12 11 11 1010 10 9 9 6 4 5 1 0 8 76 -66 Source: ANP | Elaboration: Industry Observatory/Findes Onshore Offshore 3 3 2 0 0 0 0 0 2015 2016 2017 2018 2019 2020 2021 2022 27 22 50 51 49 45 43 40 36-- 31 37-38 4240 30 30 30 31 32 32 26 28-27 28 18 17 18 18 14 Source: ANP | Elaboration: Industry Observatory/Findes onshore hydro- 184 carbon indicia statements onshore hydro- 186 carbon indicia statements This was the amount of statements issued in Espírito Santo between 2002 and 2022 Onshore Offshore 8 3 3 00 2.2. Hydrocarbon declarations If the drilling of the wells is suc- cessful in discovering any reser- voir, the oil company is obliged to issue the hydrocarbon declaration with the ANP, indicating the oc- currence of hydrocarbons or any other natural resources in the ex- plored area. Since 1998, when the hydrocarbon declaration became mandatory, 447 declarations were 2016 2017 0 2018 76 4 3 3 2019 2020 2021 33 2022 issued in Espírito Santo, divided between onshore (50.6%) and off- shore (49.4%). Between 2002 and 2022, 184 declarations were is- sued on land, highlighting the Can- cã, Jacutinga and Tucano fields. At sea, in the same period, 186 hydro- carbon declarations were issued, highlighting the Golfinho, Jubarte and Argonauta fields. In 2021, 2 hydrocarbon decla- rations were issued in Espírito Santo. Imetame announced the existence of onshore oil in block ES-T-441, located in the munici- pality of Jaguaré³. Petrobras an- nounced the existence of offshore natural gas in block ES-M-669. This block is part of Petrobras and Equinor's campaign to reach the pre-salt layer in the Espírito Santo basin. In 2022, the most re- cent period, BGM found evidence of onshore oil in blocks ES-T-496, ES-T-506 and in the Irara field, all areas located in the municipality of Linhares. In 2023, the most re- cent period, BGM found evidence of onshore oil in block ES-T-506. 2.3. Declarations of commerciality The declarations of commerciali- ty are made after the notification of hydrocarbon indications. At this stage, the oil company verifies the commercial viability for the produc- tion of the deposits. If so, the oper- 3. This block was auctioned in the 14th round of the ANP, held in 2017.. ating company must issue the dec- laration of commerciality with the ANP, demonstrating the intention to produce oil and/or natural gas in the demarcated area. 4. The project, entitled "Monai Prospectus" will be fundamental for them to evaluate the exploitation of other concessions acquired in the 11th round of the ANP. 2021 Imetame announced the existence of oil in block ES-T-441 (municipality of Jaguaré) Petrobras announced the existence of natural gas in block ES-M-669 2022 BGM announced the existence of oil in blocks ES-T-496 and EST-506 and in the Irara field 2023 BGM announced the existence of oil in block ES-T-506#1528 YEARBOOK OF THE OIL AND NATURAL GAS INDUSTRY IN ESPÍRITO SANTO 2022 CHAPTER 2 EXPLORATION AND PRODUCTION OF OIL AND NATURAL GAS IN ESPÍRITO SANTO 29 29 offshore state- 20 ments of com- merciality onshore state- 38 ments of com- merciality This was the number of statements issued in Espírito Santo since 1999 Since 1999, 58 declarations of commerciality have been issued in Espírito Santo, divided between on- shore (65.5%) and offshore (34.5%). In 2020, 3 declarations of commer- ciality were issued in an onshore environment, in the Suindara, Rio Mariricu and Garça Branca fields. The oil companies responsible for issuing these fields were, respec- tively, BGM, Petrobras and Petro- mais. In 2022, BGM issued the dec- laration of commerciality for the Irara field. In an offshore environment, in 2021 Chart 10 - Statements of commerciality in Espírito Santo (in units) 9 PRio issued the declaration of com- merciality for the Wahoo field. The Wahoo field is located in the pre- salt, in the capixaba part of the Cam- pos Basin. Since 2008, Espírito San- to has not registered a declaration of commerciality at sea. The latter was issued at the request of Petro- bras for the Camarupim Norte field. The low number of emissions from declarations of commerciality in Es- pírito Santo signals a low number of new oil and natural gas exploration and production projects in the state. 10 9 8 7 7 7 6 6 5 5 4 4 3 3 2 2 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 2.4. Oil and natural gas reserves In the transition from 2020 to 2021, Brazilian oil reserves re- corded an increase of 20.3%, reaching 24.3 billion barrels of oil in 2021. This increase in reserves came mainly from the increase in offshore reserves in Rio de Janei- ro and Espírito Santo. In Espírito Santo, in the same period, there was an increase of 7.1% in oil re- serves, reaching a reserve of 1.4 billion barrels of oil in 2021. With this increase, Espírito Santo main- tains the third position of state with the largest total oil reserves, behind São Paulo (2.1 billion bar- rels of oil) and Rio de Janeiro (20.1 billion barrels of oil). Regarding natural gas, the transi- tion from 2020 to 2021 registered an increase of 24.5% in Brazilian reserves, reaching a reserve of 562.6 billion m3. This increase in reserves came mainly from the increase in onshore reserves in Maranhão and the increase in off- shore reserves in Rio de Janeiro and Espírito Santo. In Espírito San- to, in the same period, there was an 18.2% increase in reserves, reaching a natural gas reserve of 36.2 billion m3 in 2021. With this increase, Espírito Santo ranks third among the states with the largest total natural gas reserves, behind Amazonas (45.3 billion m³) and Rio de Janeiro (388.1 billion m³). 1.4 billion barrels of oil is the input reserve in Espírito Santo in 2021, which puts the state in the 3rd position in the national ranking Source: ANP | Elaboration: Industry Observatory/Findes Onshore Offshore 2020 2014 2015 2016 2017 2018 2019 2020 2021 2022 BGM stated commerciality in the onshore field of Suindara Petrobras stated commerciality in the onshore field of Rio Mariricu Petromais stated commerciality in the onshore field of Garça Branca 2021 PRio stated commerciality in Wahoo offshore field 2023 BGM announced the existence of oil in block ES-T-506 2.4.1. Offshore reserves in Espírito Santo In 2021, Espírito Santo's offshore oil reserves recorded an increase of 10.1% compared to the previ- ous year, reaching 1.36 billion barrels of oil (chart 11). With this increase, the state registered the first increase in offshore oil re- serves in ten years and remained as the third state with the largest volume of offshore oil reserves, behind São Paulo (2.1 billion bar- rels of oil) and Rio de Janeiro (20.1 billion barrels of oil). Regarding offshore natural gas, in 2021, Espírito Santo reached 35.9 billion m³ of reserves, an increase of 18.5% compared to the previous year (chart 12). With this increase, the state returned to second place among the states with the largest reserves of offshore natural gas, behind Rio de Janeiro (388.1 billion m³). 36.2 billion m³ of natural gas is the input reserve in Espírito Santo, which puts the state in the 3rd position in the national ranking#1630 YEARBOOK OF THE OIL AND NATURAL GAS INDUSTRY IN ESPÍRITO SANTO 2022 CHAPTER 2 EXPLORATION AND PRODUCTION OF OIL AND NATURAL GAS IN ESPÍRITO SANTO 31 37 The indicator that evaluates the useful life of the reserves that will sustain production over time 5 demonstrated that, currently, Es- pírito Santo has a useful life of offshore oil reserves of 18 years, below the Brazilian indicator that registered 23 years. In relation to natural gas, the indicator showed that the capixaba reserves have a useful life of 18 years, higher than the national indicator, which recorded 11 years Chart 11 - Offshore oil reserves in Espírito Santo (in millions of barrels) 3,000 2,750 1.36 2,500 2,250 2,000 1,750 billion barrels of oil is the offshore 1,500 1,250 1,000 750 500 250 reserve of the input in 0 Espírito Santo in 2021 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Source: ANP | Elaboration: Industry Observatory/Findes 35.9 billion Chart 12- Offshore natural gas reserves in Espírito Santo (million m³) 110,000 100,000 90,000 80,000 70,000 60,000 m³ of natural gas is the 50,000 offshore reserve of the 40,000 30,000 input in Espírito Santo 20,000 10,000 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Source: ANP | Elaboration: Industry Observatory/Findes 2.4.2. Onshore reserves in Espírito Santo Regarding onshore environment, in 2021, oil reserves in Espírito Santo registered a decrease of 8.5%, compared to the previous year, reaching 49.3 million barrels of oil (chart 13). With this drop, the state lost a position among the states with the highest volumes of onshore oil reserves, ranking fifth, behind Amazonas (52.4 mil- lion barrels), Rio Grande do Norte (184.5 million barrels), Sergipe (201.4 million barrels) and Bahia (206.0 million barrels). Onshore natural gas reserves in Espírito Santo fell 10.9% in 2021 compared to the previous year and reached a reserve of 342.2 million m3, raising the eighth po- sition among the largest states with the resource in an onshore environment. Among the states with the largest onshore natural gas reserves are: Amazonas (47.3 billion m³), Maranhão (35.4 bil- lion m³), Bahia (9.9 billion m³), Rio Grande do Norte (2.6 billion m³), Alagoas (2.3 billion m³), Sergipe (416.4 million m³), Paraná (400.0 million m³) and Espírito Santo (342.2 million m³). The indicator that evaluates the useful life of the reserves that will sustain production over time demonstrated that, currently, Es- pírito Santo has a useful life of onshore oil reserves of 17 years, below the Brazilian indicator that registered 22 years. In ad- dition, the indicator for natural gas showed that the capixaba reserves have a useful life of 13 years, higher than the national in- dicator, which recorded 12 years. Chart 13-Onshore oil reserves in Espírito Santo (in millions of barrels) 300 275 250 225 200 175 150 125 100 75 50 25 0 49.3 million barrels of oil is the onshore reserve of the input in Espírito Santo in 2021 342.2 million m³ of natural gas is the onshore reserve of the input in Espírito Santo 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Source: ANP | Elaboration: Industry Observatory/Findes 5. The indicator is calculated through the relationship between the reserve 6. The indicator is calculated through the relationship between the reserve and the production of oil and natural gas. The higher the indicator, the grea- ter the time available for the production of inputs. and the production of oil and natural gas. The higher the indicator, the grea- ter the time available for the production of inputs.#1732 YEARBOOK OF THE OIL AND NATURAL GAS INDUSTRY IN ESPÍRITO SANTO 2022 Chart 14 - Onshore natural gas reserves in Espírito Santo (million m³) 2,750 2,500 2,250 2,000 1,750 1,500 1,250 1,000 750 500 250 CHAPTER 2 EXPLORATION AND PRODUCTION OF OIL AND NATURAL GAS IN ESPÍRITO SANTO Chart 15 - Total oil production in Espírito Santo (thousand barrels) 160,000 140,000 120,000 100,000 80,000 60,000 40,000 2016 34.6% was the drop in oil production in Espírito Santo in 2022 when compared to 2021 37.6% was the drop in natural gas production in Espírito Santo in 2022 when compared to 2021 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: ANP | Elaboration: Industry Observatory/Findes 2012 2013 2014 2015 2.5. Total oil and natural gas production In 2022, Brazilian oil production reached 1.1 billion barrels, 4.0% higher than in 2021. Espírito San- to produced, in 2022, a total of 50.3 million barrels of oil, 34.6% lower than what was recorded in the previous year (chart 15). The state remained in the third position with the highest oil pro- duction among all federal units, behind São Paulo (93.5 million barrels) and Rio de Janeiro (932.4 million barrels). Between 2011 and 2018, the state remained the second largest producer of the input, losing in 2019 to the state of São Paulo. Regarding natural gas, in 2022 Brazilian production was 50.3 bil- lion m3, 3.1% higher than in 2021. In Espírito Santo, 1.25 billion m³ were produced, 37.6% lower than 2016 2017 2018 2019 2020 2021 in the previous year (chart 16). The state is in the fifth position among the states with the high- est input production, behind Ba- hia (1.8 billion m³), Amazonas (5.1 billion m³), São Paulo (5.9 bil- lion m³) and Rio de Janeiro (34.8 billion m³). The explanation for the sharp drop in oil and natural gas pro- duction in Espírito Santo in 2022 is due to three factors. The first is related to the operational prob- lems faced by the FPSO Cidade de Anchieta. The second is relat- ed to the decommissioning of the FPSO Capixaba and finally, the third and last explanatory factor is the accelerated natural decline of the production of the fields un- der production in the state. 20,000 0 Source: ANP | Elaboration: Industry Observatory/Findes Chart 16 - Total natural gas production in Espírito Santo (million m³) 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Source: ANP | Elaboration: Industry Observatory/Findes 2.5.1. Offshore oil and natural gas production In 2022, offshore oil production in Espírito Santo was 47.7 million barrels of oil, 35.5% lower than in the previous year. Regarding natural gas, in 2022, capixaba production was 1.22 billion m³, 37.9% lower than in the previous year. With these falls, the state is approaching the level produced 2012 2013 2014 2015 in the years leading up to the production of oil and natural gas from the pre-salt layer in capixa- ba water. The drop can be explained mainly by the production performance in the pre-salt layer wells, which, in 2022, fell by 51.2% and 47.3% for 33 33#1834 YEARBOOK OF THE OIL AND NATURAL GAS INDUSTRY IN ESPÍRITO SANTO 2022 CHAPTER 2 EXPLORATION AND PRODUCTION OF OIL AND NATURAL GAS IN ESPÍRITO SANTO 35 47.7 million barrels of oil was the offshore production of the input in Espírito Santo in 2022 1.22 billion m³ of natural gas was the offshore production of the input in Espírito Santo in 2022 oil and natural gas production, respectively. In 2022, oil produc- tion in the capixaba pre-salt was 18.4 million barrels of oil and nat- ural gas production was 706.8 million m3. Production in the pre- salt layer accounts for 38.7% and 57.8% of offshore oil and natural gas production in Espírito Santo, respectively. The production of offshore oil and natural gas in Espírito Santo can be divided into three parts, according to its location. The first two are located in the Campos Basin, in the producing fields of Parque das Baleias and Parque das Conchas, while the third is located in the producing fields of the Espírito Santo Basin⁹. In the transition from 2021 to 2022, Parque das Baleias re- corded a 35.9% and 40.7% drop in oil and natural gas production, respectively. The area produced 37.7 million barrels of oil (chart Chart 17 Offshore oil production in Espírito Santo by location (thousand barrels) 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 2011 2012 17) and 921.9 million m3 of natu- ral gas (chart 18), being responsi- ble for producing 79.1% of the oil and 75.3% of the offshore natural gas of Espírito Santo. Parque das Conchas recorded, in the transition from 2021 to 2022, a drop of 23.6% and 23.2% in oil and natural gas production, re- spectively. The park produced 8.6 million barrels of oil (chart 17) and 82.4 million m3 of natural gas (chart 18), being responsible for producing 18.0% of the oil and 6.7% of the offshore natural gas of Espírito Santo. Finally, the producing fields of the Espírito Santo Basin registered a drop in production of 64.4% for oil and 29.2% for natural gas in the transition from 2021 to 2022, reaching a production of 1.3 mil- lion barrels of oil (chart 17) and 219.6 million m³ of natural gas (chart 18). 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Parque das Conchas Parque das Baleias Source: ANP | Elaboration: Industry Observatory/Findes ■Fields in the Espírito Santo Basin Chart 18- Offshore natural gas production in Espírito Santo by location (million m³) 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2010 2011 2012 2013 Parque das Baleias Source: ANP | Elaboration: Industry Observatory/Findes 2.5.2. Onshore oil and natural gas production Onshore oil production in Espírito Santo in 2022 was 2.6 million bar- rels of oil, 12.9% lower than in the previous year (chart 19). Onshore natural gas production in Espírito Santo, in 2022, was 21.9 million m³, 16.1% lower than in the previous year (chart 20). The state has reached the lowest level of onshore oil pro- duction in twenty years. Regarding the division by location, 95.6% of onshore oil production in Espírito Santo is concentrated in ten producing fields: Fazenda Alegre (49.9%), Cancã (16.2%), Fazenda São 7. In 2019, ANP and Petrobras signed an agreement involving the park's reservoirs for the purpose of paying royalties and special participations. The agreement considered only a reservoir called Novo Campo de Jubarte, which included the areas be- tween Jubarte, Baleia Azul, Baleia Franca, parts of Cachalote, Mangangá and Pirambu. The agree- ment made it possible to approve a new Develop- ment Plan for the New Jubarte Field, with the exten- 2014 2015 2016 ■Parque das Conchas 2017 2018 2019 2020 2021 2022 Fields in the Espírito Santo Basin Rafael (7.2%), Inhambu (6.6%), and Fazenda Santa Luzia (5.7%), Fazen- da São Jorge (3.8%), Lagoa Parda (3.4%), Fazenda Queimadas (1.2%), Suindara (0.9%) and São Mateus (0.9%). It is worth highlighting the good performance in the production of the Lagoa Parda and Suindara fields. These areas had low produc- tion and in 2021, they recorded a pro- duction of 27.8 and 102.5 thousand barrels of oil, respectively. The Su- indara field is operated by oil compa- ny BGM Petróleo e Gás Natural and the Lagoa Parda field is operated by Capixaba Energia. sion for another 27 years for the production phase. 8. Composed of the fields of Abalone, Argonauta and Ostra. 9. Composed of the fields of Cação, Camarupim, Camarupim Norte, Canapu, Cangoá, Golfinho and Peroá. 2.6 million barrels of oil was the onshore production of the input in Espírito Santo in 2022 21.9 million m³ of natural gas was the onshore production of the input in Espírito Santo in 2022#1936 YEARBOOK OF THE OIL AND NATURAL GAS INDUSTRY IN ESPÍRITO SANTO 2022 Onshore natural gas production in Espírito Santo is concentrated in ten producing fields, which together account for 96.4% of total production. The fields are: Fazenda Alegre (35.9%), Fazenda Santa Luzia (16.9%), Fa- zenda São Rafael (16.5%), Rio São Mateus (11.1%), Lagoa Parda (5.8%), Cancã (3.7%), Fazenda São Jorge (2.1%), Inhambu (1.9%), Cacimbas (1.8%) and Fazenda Queimadas (0.9%). Chart 19 - Onshore oil production in Espírito Santo (thousand barrels) 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 ESPÍRITO SANTO, PROTAGONISM IN DIVERSIFIED PRODUCTION OF OIL & GAS FROM ONSHORE TO PRE-SALT Source: ANP | Elaboration: Industry Observatory/Findes 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Chart 20 - Onshore natural gas production in Espírito Santo (million m³) 500 450 400 350 300 250 200 150 100 50 0 Source: ANP | Elaboration: Industry Observatory/Findes 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Márcio Felix - CEO of EnP Energy Two phases mark the evolution of oil and natural gas reserves in Espírito Santo. The first phase, in the second half of the twentieth century, started in 1957, was characterized by a concentration in onshore ac- tivities in the north region of the state. In this same phase, Espírito Santo always with the vocation, but with the milestone of the beginning of maritime exploration in Brazil in 1968, through well 1-ESS-1 (Espírito Santo Submarino), on the coast of the mu- nicipality of São Mateus. The state was not a discov- erer of oil or gas, but it found a gigantic salt dome, bringing the first clues to look for hydrocarbons be- low the salt layer. The second phase is marked by the discovery of significant volumes of oil and gas in deep waters, including the pre-salt layer. According to data from the National Agency of Petroleum, Nat- ural Gas and Biofuels - ANP presented in this chap- ter, in 2001, Espírito Santo had 1.4% and 5.7% of oil and natural gas reserves in its territory and area of maritime influence, respectively. After a sequence of relevant discoveries of hydro- carbons on the coast of Espírito Santo, from the 2000s, the state became part of the group of the three largest producers of O&G in Brazil, together with the states of Rio de Janeiro and São Paulo, be- ing the first to produce in the pre- salt through well 1-ESS-103A, in the Jubarte field, in September 2008. In 2009, it achieved a share in national reserves of 12.8% for oil and 15.1% for natural gas. The increase in proven reserves and the consequent projects for the development of its produc- tion, mostly headed by Petro- bras, have led to the emergence of important infrastructure in- vestments and production flow, marking a golden phase for the sector and for the economic development of the state. If, in 2001, the state's participation in the national production of oil and natural gas represented 1.5% and 2.8%, respectively, occupying the seventh position among the pro- ducing states in both inputs, in 2006 it became the second na- tional producer. In 2014, the state continued to occupy the second#20CHAPTER 2 EXPLORATION AND PRODUCTION OF OIL AND NATURAL GAS IN ESPÍRITO SANTO 39 position among the largest producers of both in- puts, reaching 16.3% of national oil production and 14.9% of national natural gas production. After this period, with the growth of pre-salt pro- duction on the coast of São Paulo and some de- cline in the capixaba production, the state became the third largest national oil producer, very rele- vant position and far ahead of the fourth place. In 2021, for example, despite this decline, the state delivered a very significant contribution to national production, of 7.3% for oil and 4.1% for natural gas. Part of the explanations for the drop in oil and gas production in Espírito Santo can be justified by a hiatus of new discoveries and the implementation of large production projects. In the period 2011 to 2021, even in a scenario of production reduction, we had two great results. The giant Jubarte field continued with increasing production, which had already happened in the previous decade. For the onshore environment, the main highlight was the growth of production from the Cancã field, in the municipality of Lin- hares, northern region of the state. However, the expectation is that production in the state will grow again as early as 2023, both on land and at sea. The basis for this statement lies in promising and recent events in the sector, such as the implementation of at least one large maritime project and better operational performance, such as mature areas such as Parque das Conchas, op- erated by Shell, and several land fields. In summa- ry, the state has attracted the attention of new and traditional oil companies that are projecting their operations in Espírito Santo, including exploratory activities (acquisition of seismic data and drilling of pioneer wells) aiming for new discoveries, such as CNOOC, ExxonMobil and Repsol, in addition to Petrobras itself. These new proj- ects have not yet started the pro- duction of inputs and therefore do not yet appear as important vectors of oil and natural gas pro- duction. In addition to the imple- mentation of the Integrated Proj- ect of Parque das Baleias (100% Petrobras), offshore production begins to gain new momentum with the arrival of operators such as PRIO (Itaipu and Wahoo dis- coveries), BW Energy (Golfinho Center) and 3R Petroleum (Peroá Center). In addition to these, the consolidation of Seacrest's proj- ects at Cricaré and Norte Capix- aba Centers is expected, the lat- ter being acquired by Petrobras. Also, from the onshore explo- ration and production assets of Imetame Energia, Energy Paranã, BGM, ES Óleo & Gás and Capixa- ba Energia, among other compa- nies with Espírito Santo DNA and from other regions of the coun- try, such as Origem, for example. The expectation is that with a greater diversity of players and environments, the production of oil and gas in the state rises in a sustainable way, keeping Espírito Santo in the group of the 3 largest producing states in Brazil. With this, there will be a greater generation of income and employment for capix- abas, contributing to a new phase of development for Espírito Santo. 2.6. Production projection For the projection of oil and nat- production in each producing well in Espírito Santo. ural gas production in Espírito Santo, the use of accounting rules to capture the production trend It is expected that between 2023 focused on the regional supply of and 2027 total oil production will the input was adopted as a meth- have an average annual increase odology. The values were project- of 10.3%, reaching in 2027 a pro- ed until the year 2027, considering duction of 90.0 million barrels of a detailed analysis of the profile of oil. For natural gas, an average an- the supply of hydrocarbons, relat- nual increase of 11.9% is projected ed to the exploration and produc- between 2023 and 2027, reaching tion phases of each field, operator a production of 2.43 billion m³ in and platform. The calculations 2027. The reversal of the downward were performed using algebra- trend in production is expected in ic formulas that reproduced the the transition from 2024 to 2025, means and historical patterns of both for oil and natural gas. 2.6.1. Projection of offshore production in Espírito Santo Offshore production accounts for a majority share of the total vol- ume produced of oil and natural gas in Espírito Santo. The evolu- tion of extraction at sea is respon- sible for most of the state's pro- duction and, for the coming years, it is expected that this configura- tion will not be changed. Between 2023 and 2027, offshore oil pro- duction is expected to record an average annual increase of 10.7%, reaching an output of 87.8 million barrels in 2027. For natural gas, an average annual increase of 12.0% is projected, between 2023 and 2027, reaching a production of 2.41 billion m3, in 2027. Charts 21 and 22 show the re- cent evolution and projection of production at sea until 2027. The decrease in the production of inputs between 2017 and 2022 can be explained by the natural decay of the producing fields at sea, with emphasis on the sharp falls in Parque das Baleias and Parque das Conchas. In addition, during the period there was a low number of new offshore projects in the state and the consequent concentration of future produc- tion in projects that were devel- oped in the past. 10.7% is the expected average annual increase in offshore oil production between 2023 and 2027, reaching 87.8 million barrels 12.0% is the expected average annual increase in offshore natural gas production between 2023 and 2027, reaching 2.43 billion m3#2140 40 A YEARBOOK OF THE OIL AND NATURAL GAS INDUSTRY IN ESPÍRITO SANTO 2022 CHAPTER 2 EXPLORATION AND PRODUCTION OF OIL AND NATURAL GAS IN ESPÍRITO SANTO 41 For 2023, a small recovery in off- shore production is expected due to overcoming operational prob- lems that affected the produc- tion performance of the previous year, such as the leak in the hull of FPSO Cidade de Anchieta and the decommissioning of FPSO Capixaba. For 2024, a drop in off- shore production is projected due to the continuation of the natural decline in production. A significant change is expected in 2024 and 2025, when Petro- bras intends to put into operation a new platform in Parque das Ba- leias (FPSO Maria Quitéria) and PetroRio (PRio) plans to start the extraction in the Wahoo field. The Petrobras project intends to in- crease the oil and gas recovery factor through the optimization of the current drainage network, with the interconnection of a new FPSO. The intention is that the new platform will be operating in the last quarter of 2024. PRIO intends to drill 4 producing wells and 2 injectors, with 1st oil ex- pected for the 1st half of 2024. These projects are responsible for the reversal curve of the projected falls for the production of oil and natural gas in Espírito Santo. Chart 21 - Projection of offshore oil production in Espírito Santo (thousand barrels) 133,869 118,721 101,517 87,144 87,805 82,692 73,891 69,793 47,679 52,719 50,997 2017 2018 2019 2020 2021 2022 2023 2024 2025 Production Elaboration: Industry Observatory/Findes and LCA. 2026 2027 (d) (d) (d) (d) (d) Projected Chart 22 Projection of offshore natural gas production in Espírito Santo (in millions of m³) 3,959 3,432 2,640 2,277 2,411 1,971 2,121 1,759 1,224 1,367 1,292 2.6.2. Projection of onshore production in Espírito Santo Onshore production accounts for a minority share of the volume of oil and natural gas produced. The evolution of production on land does not significantly af- fect the total produced by the state. However, this activity is important in the regional socio- economic development of pro- ducing municipalities, especially in the generation of employment and income. It is expected that between 2023 and 2027 onshore oil production will have an aver- age annual drop of 2.9%, reach- ing in 2027 a production of 2.2 million barrels. For natural gas, an average annual drop of 2.2% is projected, between 2023 and 2027, reaching a production of 18.4 million m³, in 2027. Charts 23 and 24 show the re- cent evolution and projection of onshore production until 2027. The downward trend in the pro- duction is due to the fact that all the main fields are mature and with a declining trend in produc- tion. In addition, Petrobras has no interest in the development of onshore assets, which reduc- es the absorption capacity of new projects in the region. The company owns the fields with the highest production of terres- trial oil and natural gas in Espíri- to Santo. Despite this result, less sharp declines are expected until 2027 due to the sale of Petrobras assets to other operators. The prospect is that these new en- trants will increase investment in revitalizing and extending the useful life of these areas. In ad- dition, the increase in the num- ber of hydrocarbon and com- merciality declarations, aligned with the sale of land areas in the Permanent Offer, signals a pos- sible increase in the number of new onshore projects. It should be noted that as the values of production on land are lower, any new projects or un- scheduled shutdowns can cause large deviations from the pro- jected volumes. 4.1% is the expected average annual drop in onshore oil production between 2022 and 2027, reaching 2.2 million barrels 5.4% is the expected average annual drop in onshore natural gas production between 2022 and 2027, reaching 17.0 million m3 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 (d) (p) (d) (d) (p) | Production Projected Elaboration: Industry Observatory/Findes and LCA.#2242 YEARBOOK OF THE OIL AND NATURAL GAS INDUSTRY IN ESPÍRITO SANTO 2022 Onshore Chart 23 - Projection of onshore oil production in Espírito Santo (thousand barrels) production is 3,891 3,588 3,472 important in 3,256 2,989 2,603 2,515 2,432 2,340 2,254 2,171 the regional socioeconomic development of producing municipalities, 2017 2018 2019 2020 | Production (d) (p) (d) (d) 2021 2022 2023 2024 2025 2026 2027 (p) Projected especially in the Elaboration: Industry Observatory/Findes and LCA. generation of employment and income Chart 24-Projection of onshore natural gas production in Espírito Santo (in millions of m³) 63 31 32 2017 2018 2019 27 27 26 22 21 20 20 19 19 18 2020 2021 2022 2023 2024 2025 2026 2027 Production Elaboration: Industry Observatory/Findes and LCA. (d) (d) (d) (d) Projected (d)#23CHAPTER 3 | ECONOMIC REFLECTIONS Chapter 3 ECONOMIC REFLECTIONS The exploration and production of oil and natural gas generates demands for goods and services that creates a specialized market in its surround- ings. As a result, there is an expan- sion in the number of companies, qualified jobs, investments and the payment of financial compensation and taxes related to the exploitation of this natural resource. 3.1. Companies and jobs in the productive chain of the O&G sector 45 45 The chain of the oil sector of the State of Espírito Santo was segmented into five links: (i) ex- ploration and production (E&P), also known as upstream, which consists of the activities of ex- traction and production of oil and gas (O&G); (ii) derivatives, which are the activities related to the processing of oil and natural gas; (iii) supply, which consists of the transformation and commercial- ization of O&G products; (iv) pet- rochemical, which is a branch of the chemical industry that uses oil and natural gas as an input; and (v) supply chain, in which industrial activities that provide specific products and services for E&P activities are inserted. In 2021, the productive chain of the O&G sector had 527 compa- nies in Espírito Santo, 5.4% higher than in the previous year (table 1). This total of companies repre- sented 2.2% of all national com- panies in the segment and 0.6% of all companies in the state. This number of companies was dis- tributed in the following links as follows: 80.8% in the supply chain; 527 companies in Espírito Santo operating in the oil and natural gas production chain in 2021 Supply Chain 80.8% Supply 10.1% E&P 6.6% 10.1% in supply; 6.6% in E&P; 1.5% Petrochemical 1.5% in petrochemical companies and 0.9% in petroleum derivatives. Petroleum derivatives 0.9% Table 1 Companies in the productive chain of the O&G sector in Espírito Santo (in units) Chain links E&P 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Oil derivates Petrochemicals Supply Supply Chain Total 32 27 26 26 27 26 20 24 30 34 35 7 6 16 6 5 6 5 7 6 5 сл 2 2 2 1 0 1 1 1 2 5 8 57 53 52 54 52 52 51 51 44 49 49 48 53 416 406 407 426 427 440 468 474 483 450 422 525 528 555 561 568 534 500 490 494 500 527 Source: Ministry of Labor and Social Security | Elaboration: Industry Observatory/Findes#2446 YEARBOOK OF THE OIL AND NATURAL GAS INDUSTRY IN ESPÍRITO SANTO 2022 CHAPTER 3 | ECONOMIC REFLECTIONS 47 47 Chain links 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 E&P 3.192 3.251 3.087 3.207 3.071 2.883 2.518 2.439 3.011 3.207 3.352 Oil derivates 131 127 206 137 138 123 117 94 113 94 75 Petrochemicals 35 51 53 51 0 123 123 125 133 148 162 Supply 645 694 693 716 728 699 687 661 733 738 787 In relation to the total number of employees, in 2021, the produc- tive chain of the O&G sector em- ployed 11,969 workers in Espíri- to Santo, 4.4% higher than in the previous year (table 2). This total number of employees represent- ed 2.9% of all national compa- nies in the segment and 1.3% of all companies in the state. This number of jobs was distributed in the following links: 63.4% in the supply chain; 28.0% in E&P; 6.6% in supply; 1.4% in petro- chemical companies; 0.6% in oil products companies. Table 2- Employees in the productive chain of the O&G sector in Espírito Santo In 2021, the productive chain of the O&G sector employed 522 occupations, among them: weld- er (5.2%), administrative assis- tant (3.7%), oil exploration opera- tor (3.4%), machine maintenance mechanic (3.1%) and truck driver (2.6%). Regarding the age group, 36.2% of the workers in the O&G chain from Espírito Santo were between 30 and 39 years old (4,328) and 40.4% of the employ- ees were over 40 years old, in 2021. Regarding the education of workers in 2021, 58.3% had completed high school, 22.7% had completed higher education and 2.1% had a master's degree and doctorate. As a result of the qualification of its employees, in 2021 the av- erage monthly wage of the O&G sector in Espírito Santo was BRL 6,976.6 and the average in Brazil was BRL 6,144.8. These values were higher than the total av- erage monthly remuneration of the state (BRL 2,631.04) and the country (BRL 3,081.3). Table 3- Characteristics of the labor market in the productive chain of the O&G sector in Espírito Santo - 2021 36.2% of workers in the oil and natural gas industry were between 30 and 39 years old in 2021 40.4% of workers in the oil and natural gas industry were over 40 years old in 2021 Supply Chain 6.868 8.223 7.186 7.630 7.143 5.981 6.232 7.107 7.155 7.275 7.593 Main Ocupations ES BR ES/BR% Total 10.871 12.346 11.225 11.741 11.080 9.809 9.677 10.426 11.145 11.462 11.969 Welder 628 14,854 4.2 Administrative Assistant 447 15,723 2.8 Source: Ministry of Labor and Social Security | Elaboration: Industry Observatory/Findes Oil Exploration Operator 406 7,984 5.1 Chart 25 Employees in the productive chain of the O&G sector in Espírito Santo 14,000 Machine maintenance mechanic 375 6,972 5.4 Truck Driver 314 14,419 2.2 12,000 Worker of cleaning and conservation services of public areas 277 1,376 20.1 10,000 8,000 2,000 0 2011 2012 2013 Supply Chain ☑ 11,969 formal employees were employed in Espí- rito Santo in the oil and natural gas production chain in 2021 6,000 4,000 Source: Ministry of Labor and Social Security | Elaboration: Industry Observatory/Findes Due to the multidisciplinarity necessary to carry out the activ- ity in the oil and natural gas in- dustry, the profile of the workers who make up the sector's chain is heterogeneous, covering var- ious occupations, various age groups and levels of qualifica- tion and average salary. Table 3 presents the worker profile of the complete O&G chain. Office Assistant 247 12,347 2.0 Occupational safety technician 245 6,066 4.0 Storekeeper 236 6,115 3.9 Mechanical technician 232 4,779 4.9 2014 E&P 2015 2016 2017 2018 2019 2020 2021 ■Supply Petrochemicals Age Group ES BR ES/BR% Oil derivates 10 to 14 2 60 3.3 15 to 17 96 1,934 5.0 18 to 24 1,231 41,229 3.0 Master and 25 to 29 30 to 39 1,473 51,181 4,328 142,534 2.9 Distribution of educa- tion of employees in the oil and natural gas industry in 2021: High 58.3% school Higher 22.7% education doctorate 2.1% 3.0 40 to 49 50 to 64 3,228 1,535 110,000 2.9 65,957 2.3 65 or more 76 5,952 1.3#25428 YEARBOOK OF THE OIL AND NATURAL GAS INDUSTRY IN ESPÍRITO SANTO 2022 CHAPTER 3 | ECONOMIC REFLECTIONS Schooling ES BR ES/BR % Illiterate 16 666 2.4 Up to 5th Incomplete 82 4,731 1.7 5th Complete Elementary School 78 4,751 1.6 6th to 9th Elementary School 324 13,312 2.4 Complete Elementary School 570 27,082 2.1 Incomplete High School 958 20,814 4.6 Complete High School 6,615 223,704 3.0 Incomplete Higher Education 366 20,231 1.8 Complete Higher Education 2,712 98,580 2.8 Master's Degree 224 4,269 5.2 Doctorate 24 707 3.4 Averagen Wage (R$) ES BR ES/BR% Average Wage 6.976,6 6.144,8 Source: Ministry of Labor and Social Security | Elaboration: Industry Observatory/Findes 3.2. Government Revenues Government participations are fi- nancial compensation paid by oil companies as consideration for the exploitation of a natural and finite resource. Government holdings can be divided between Royalties and Special Participation (SP). Royalties are a financial compen- sation calculated through the ap- plication of a rate provided for in the contract, ranging from 5% to 15%, on the billing of the produc- ing well. Special Participations are a financial compensation paid by oil companies that have fields with great productivity. That is, it is an extraordinary payment related to the level of production of an area. The calculation of the amount to be paid in SP occurs through the application of progressive rates on the net revenue from the quarterly production of each field. In Brazil, oil and natural gas pro- duction paid, in 2022, R$129.9 bil- lion in government shares, 67.0% higher than in the previous year. This compensation was intended for the Federal Government, the states and the municipalities. The composition of these payments in the country was: 45.5% in roy- alties; 45.3% in special partici- pations, 8.9% in signing bonuses and 0.3% in occupancy rate or area retention. In Espírito Santo, the total govern- ment shares were BRL 3.3 billion in 2022, 10.8% lower than in the previous year (chart 26). The ex- planation for this drop is due to the 34.6% decrease in oil production and 37.62% in natural gas produc- tion in Espírito Santo, in 2022. Of this total, BRL 1.6 billion was re- lated to the payment of Royalties and BRL 1.7 billion was related to the payment of Special Participa- tions. The state received the third highest collection of government shares among all states, behind Rio de Janeiro (BRL 49.5 billion) and São Paulo (BRL 5.9 billion). According to ANP projections, be- tween 2022 and 2027, government revenues from oil and gas explora- tion within the areas of influence of Espírito Santo are expected to record an average annual growth of 12.6%, reaching in 2027 a total collection of BRL 4.3 billion (chart 26). It is expected that the collec- tion of royalties will reach BRL 2.0 billion and the collection of Special Participations will reach BRL 2.3 billion in 2027. BRL 3.3 billion fwere paid for the production of oil and natural gas to Espírito Santo in government shares in 2022 Chart 26 - Revenue from government participations (royalties and SP) in Espírito Santo (BRL million) 5,500 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 الاسلااا Source: ANP | Elaboration: Industry Observatory/Findes Constant values - IPCA [National Extended Consumer Price Index] accum. Jan-Dec 2022 I Municipalities of ES Estate of ES I Municipalities projection IES State Projection 49 447#2650 YEARBOOK OF THE OIL AND NATURAL GAS INDUSTRY IN ESPÍRITO SANTOI 2022 CHAPTER 3 | ECONOMIC REFLECTIONS 57 51 Table 4 - Revenue from government participations (royalties and SP) in Espírito Santo (BRL million) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Cities in ES 736 1,372 1,743 1,659 1,763 1,996 866 1,080 1,347 1,459 927 1,307 1,218 Total Government Inte- rests Estate of ES Total Brazil 1,081 43,763 2,020 2,973 2,644 2,830 1,165 1,316 1,763 2,336 3,344 1,770 2,383 2,073 48,772 56,604 53,979 56,491 35,363 24,066 40,129 67,283 68,119 54,382 81,969 117,941 % of Brazil 4.2 7.0 8.3 8.0 8.1 8.9 9.1 7.1 5.5 7.1 5.0 4.5 2.8 Cities in ES 616 1,129 1,305 1,308 1,390 938 709 843 1,004 841 637 912 888 Royalties Estate of ES Total Brazil % of Brazil 603 1,051 1,222 1,243 1,336 900 690 814 962 871 609 805 753 20,119 24,708 28,105 27,678 29,555 19,971 16,052 20,153 29,675 28,544 26,569 40,007 59,128 6.1 8.8 9.0 9.2 9.2 9.2 8.7 8.2 6.6 6.0 4.7 4.3 2.8 Cities in ES 120 242 438 350 374 264 157 237 344 618 290 395 330 Special Participation Estate of ES Total Brazil 478 969 1,751 1,401 1,494 1,057 626 949 1,374 2,473 1,161 1,579 1,320 23,644 24,064 28,499 26,301 26,936 15,392 8,014 19,976 37,608 39,575 27,813 41,961 58,813 % of Brazil 2.5 5.0 7.7 6.7 6.9 8.6 9.8 5.9 4.6 7.8 5.2 4.7 2.8 Source: ANP | Elaboration: Industry Observatory/Findes Constant values - IPCA [National Extended Consumer Price Index] accum. Jan-Dec 2022 $1.0 billion USD FOB was exported by the oil and natural gas industry of Espírito Santo 3.3. External sector The oil and natural gas industry of Espírito Santo exported USD 1.0 bil- lion in 2022, 4.0% higher than in the previous year (chart 27). The total exported by the sector in the state represented 1.7% of the sector's foreign sales in the country and 11.4% of the state's total foreign sales. Among all the sectors of the state of Espírito Santo, the oil and natural gas industry was the third sector with the highest exports, behind only the sectors of metallic mineral extraction and metallurgy. Chart 27 - Oil exports in Espírito Santo (in USD million FOB) and share of oil exports in total exports of Espírito Santo (in %) Exported value (USD million) 2,200 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 2010 2011 2012 2013 2014 2015 2016 2017 Total exported oil and gas sector Participation in the total exported by the state 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Participations in the total exported by ES ()% Source: Ministry of Development, Industry, Commerce and Services | Elaboration: Industry Observatory/Findes The foreign sale of crude oil to- taled USD 970.4 million, 93.1% of the total exported by the capix- aba oil and natural gas sector in 2022 (table 5). In the transition from 2021 to 2022, crude oil ex- ports registered a drop of 1.8% explained by the reduction in production in the state. The des- tinations of capixaba crude oil were: Malaysia (77.0%), Singapore (8.9%), India (5.8%), Sweden (5.1%) and the Netherlands (3.2%). Exports of coke and petroleum products totaled USD 70.8 mil- lion, 6.8% of the total exported by the local oil and natural gas sector in 2022 (table 5). In the transition from 2021 to 2022, the export of coke and petroleum products registered an increase of 496.1% explained by the in- crease in foreign sales of fuel oil to Singapore. The main des- tinations of coke and petroleum products from Espírito Santo were: Singapore (99.8%), Mal- ta (0.11%) and Marshall Islands (0.08%). Finally, exports of the products that make up the petrochemical segment totaled USD 1.4 million, 0.1% of the total exported by the capixaba oil and natural sector in 2022 (table 5). Between 2021 and 2022, the export of petro- chemical products registered a drop of 40.9%, mainly explained by the reduction in sales of fluo- rinated polymers to France. The main destinations of petrochem- ical products were: Argentina (73.9%), Uruguay (17.0%), Para- guay (4.7%) and Mexico (0.8%). 11.4% of Espírito Santo's total foreign sales are from the oil and natural gas industry#2752 529 YEARBOOK OF THE OIL AND NATURAL GAS INDUSTRY IN ESPÍRITO SANTO 2022 CHAPTER 3 | ECONOMIC REFLECTIONS Regarding imported products, the oil and natural gas industry of Es- pírito Santo imported USD 130.5 million in 2022, 4.2% lower than in the previous year. The total im- ported by the sector in the state represented 0.2% of the sector's Table 5 - Exports of the O&G sector in Espírito Santo (USD million) external purchases in the country and 1.4% of the state's total exter- nal purchases (table 6). The main prominent segments are imports of petrochemical products, especially organic chemicals and thermoset- ting resins. Petrochemical Products Total exported Oil and Natural Gas Period Coke and petroleum products Total ES 2010 900.9 2011 1,512.3 % ES/BR 3.6% 4.5% Total ES % ES/BR Total ES % ES/BR Total ES % ES/BR 899.2 5.5% 0.0 0.0% 1.7 0.0% 1,510.6 7.0% 0.0 0.0% 1.7 0.0% 2012 1,322.8 4.0% 1,322.3 6.5% 0.0 0.0% 0.5 0.0% 2013 933.8 3.8% 931.6 7.2% 0.0 0.0% 2.1 0.0% 2014 2,006.4 7.4% 2,000.7 12.2% 0.0 0.0% 5.7 0.1% 2015 1,130.7 5.9% 1,128.5 9.6% 0.1 0.0% 2.1 0.0% 2016 466.7 2.8% 465.1 4.6% 0.0 0.0% 1.6 0.0% 2017 924.2 3.8% 919.9 5.5% 0.0 0.0% 4.4 0.1% 2018 1,004.2 2.9% 960.0 3.8% 38.5 0.9% 5.7 0.1% 2019 1,075.0 3.1% 1,014.5 4.2% 58.8 1.0% 1.7 0.0% 2020 599.0 2.1% 566.9 2.9% 30.4 0.6% 1.7 0.0% 2021 1,002.5 2.3% 988.3 3.2% 11.9 0.2% 2.3 0.0% 2022 1,042.5 1.7% 970.4 2.3% 70.8 0.5% 1.4 0.0% Source: Ministry of Development, Industry, Commerce and Services | Elaboration: Industry Observatory/Findes Table 6-Imports from the O&G sector in Espírito Santo (USD million) Period Total imported Total ES % ES/BR Oil and Natural Gas Total ES % ES/BR Coke and petroleum products Petrochemical Products Total ES % ES/BR Total ES % ES/BR 2010 374.1 1.0% 0.0 0.0% 46.3 0.4% 327.8 2.6% 2011 421.0 0.8% 0.0 0.0% 17.1 0.1% 403.9 2.8% 2012 405.0 0.8% 0.0 0.0% 34.6 0.2% 370.4 2.6% 2013 281.6 0.5% 0.0 0.0% 37.8 0.2% 243.8 1.6% 2014 256.3 0.4% 0.0 0.0% 35.5 0.2% 220.8 1.4% 2015 271.4 0.8% 0.0 0.0% 67.0 0.7% 204.3 1.6% 2016 160.0 0.7% 0.0 0.0% 33.8 0.4% 126.2 1.2% 2017 175.5 0.6% 0.0 0.0% 81.1 0.6% 94.4 0.8% 2018 164.1 0.5% 0.0 0.0% 46.3 0.3% 117.8 0.8% 2019 166.1 0.5% 0.0 0.0% 51.6 0.4% 114.4 0.8% 2020 174.9 0.7% 0.0 0.0% 85.6 1.0% 89.2 0.7% 2021 136.2 0.3% 0.0 0.0% 30.4 0.2% 105.9 0.6% 2022 130.5 0.2% 0.0 0.0% 22.5 0.1% 107.9 0.5% Source: Ministry of Development, Industry, Commerce and Services | Elaboration: Industry Observatory/Findes 3.4. Research, Development and Innovation (ANP RD&I Clause) Signed in the oil and natural gas exploration and production con- tracts, the RD&I clause estab- lishes that oil companies must carry out expenses qualified as research and development in an amount corresponding to 1% (one percent) of the gross reve- nue from the production of the fields that pay Special Participa- tion. The amounts generated are invested in RD&I projects that can be executed by the oil com- pany itself, by Brazilian Compa- nies or by accredited institutions throughout the country 10. Between 1998 and June 2022, the RD&I clause generated in Brazil approximately BRL 24.5 billion in bond volume, with Petrobras responsible for BRL 20.6 billion (84.2%). In 2021, the amount generated in obligations under the clause was BRL 3.03 billion, an increase of 107.6% compared to the same period of the previous year. The increase in resources in the period can be explained by the increase in production in areas of high pro- ductivity, notably in areas that pay special participations, in ad- dition to the appreciation of the price of a barrel of oil in the pe- riod. Regarding the number of proj- ects, between 1998 and June 2022, 13,013 projects were de- veloped in Brazil financed with funds from the obligations gen- erated by the clause. In 2021, the total number of projects fi- nanced by the clause was 805, an increase of 352.2% compared to 2020. In Espírito Santo, between 2000 and June 2022, 94 projects fi- nanced with funds from the obli- gations generated by the clause were developed. Of these proj- ects, 91 were executed, or are being executed, by UFES, 1 proj- ect by IFES, 1 project by Facul- dade do Centro Leste (UCL) and 1 project by the company Mogai Tecnologia de Informação S.A. (graphic 28). The projects devel- oped in Espírito Santo covered the areas of supply research, ex- ploration and production, natural gas and cross-cutting themes. 10. In previous editions of the Yearbook of the Oil and Natural Gas Industry in Espírito Santo, the legal and regulatory system pertinent to the RD&I clause was presented and analyzed. BRL 24.5 billion were generated by the RD&I clause for research throughout Brazil between 1998 and 2002 13,013 was the total of research projects funded by the RD&I clause throughout Brazil between 1998 and 2002 94 was the total of research projects funded by the RD&I clause in Espírito Santo between 2000 and June 2022 593#2854 YEARBOOK OF THE OIL AND NATURAL GAS INDUSTRY IN ESPÍRITO SANTO 2022 Chart 28 - Platform Decommissioning Program (PDI) Projects that received resource from the RD&I clause in Espírito Santo (in units) 18 16 14 14 13- 12 10 8 6 6 6 4 4 3 3 3--3- 3 2 2 2 1 0 0 0 2000 2001 Number of Projects 2011 2012 0 2013 2014 2015 2016 2017 2018 Source: ANP. Elaboration: Industry Observatory/Findes The information originates from Technical Regulation No. 05/2005 and Technical Regulation No. 03/2015. 1 Data until June 2022 % ES/BR 8% 16 7% 6% 5% 4% 3% -5- 2 -3 2% 1% 0% 2019 2020 2021 20221 BRL 5.2 million were invested in research in Espírito Santo from January to June 2022 In 2021, 2 projects were initiated involving resources from the RD&I clause in Espírito Santo with an in- vestment of BRL 3.5 million. The first project is being carried out by the company Mogai Tecnolo- gia de Informação S.A. and aims to identify and manage corrosion on oil platforms using 3D cam- eras. The company was the first company from the state of Espíri- to Santo to develop a project with resources from the RD&I Clause. The second project is being car- ried out by the Geological Ocean- ography Laboratory of UFES and aims to calibrate paleobathymet- ric zones with the quaternary in the Espírito Santo Basin. By June 2022, 3 projects involv- ing RD&I clause resources in Es- pírito Santo were initiated with an investment of BRL 5.2 million. The first project is underway at the Telecommunications Labo- ratory of UFES and aims to de- velop a Profiler with optical fiber for FPSO tanks. The second proj- ect is being carried out at UFES Lab Petro and aims at the perfor- mance of chemical dispersants in oils for mitigation in cases of spills. The third project is in sec- ondary execution by the High Performance Computing Labo- ratory (LCAD) of UFES and aims to develop a high resolution cus- tomizable computer acquisition and processing system for fault diagnosis in electric motors, us- ing artificial intelligence. Percentage (%) ES/BR XXX#29CAPÍTULO 4 OPORTUNIDADES PARA O ESPÍRITO SANTO 57 57 Chapter 4 OPPORTUNITIES FOR ESPÍRITO SANTO For the coming years, the strategies of the main oil companies direct towards a scenario marked by the possibility of recovering the global investment capacity lost in recent years. Despite persistent global ge- opolitical and macroeconomic un- certainty, the industry remains com- mitted to providing investments that provide energy security in the short term and, for the long term, invest- ments that ensure a transition to the use of cleaner energies. Espírito Santo will be impacted by the priority projects of large oil companies and also by the new market of small and medium-sized companies operating in new areas of the sector. Opportunities for the state can be summarized into four groups: i) Announced Investments; ii) Permanent Offer; iii) Petrobras' divestment plan and iv) Decommis- sioning of facilities. $ BRL 8.8 billion is the expected amount of investments in Espírito Santo in the oil and natural gas sector by 2027 4.1. Announced Investments In Espírito Santo, according to the survey of investments carried out by the Observatory of Industry/ Findes, it is estimated that the state will receive BRL 8.8 billion in investments in the oil and natural gas sector, until 2027. In total, 8 projects were raised in the State, mainly involving PRio, Petrobras, Shell, Karavan Oil and Gas and Seacrest Petróleo. The highlight is the Integrated Project of Parque das Baleias, which intends to ins- tall the Maria Quitéria FPSO in the Jubarte field (table 7). The Integrated Project of Parque das Baleias (IPB) intends to in- crease the oil and gas recovery factor through the optimization of the current drainage network, with the interconnection of a new FPSO11. In February 2022, Petro- bras and Yinson signed the agree- ment for chartering and provision of services of FPSO Maria Quité- ria. The intention is that the new platform will be operating in the last quarter of 2024. Currently, the project is in Petrobras' Strategic Plan 2023-2027. In addition to this investment, the- re are also announcements from oil companies and other compa- nies that are interested in adding new areas in their portfolios or ex- panding their activities in Espírito Santo. Table 7 presents the main projects raised by the Industry Observatory. 11. The park area is formed by the areas of Jubarte, Baleia Azul, Baleia Franca, parts of Cachalote and Pirambu.#3058 YEARBOOK OF THE OIL AND NATURAL GAS INDUSTRY IN ESPÍRITO SANTO 2022 Table 7 - Top investment projects announced in the O&G sector in Espírito Santo for the next 5 years Investor PetroRio Project The Wahoo project includes the drilling of wells and the connection between the wells and the Frade FPSO. Municipality President Kennedy Project Status Amount (in millions BRL) Running 4,200 Petrobras Development of the New Jubarte Field, for- med by the areas of Jubarte, Baleia Azul, Ba- leia Franca, parts of Cachalote and Pirambu. Anchieta, Piúma, Itapemirim, Marataízes and Presidente Kennedy Under Bidding 1,300 Petrobras Shell Construction of the Arpoador Drillship for drilling and oil extraction. Development and Production of the fields of the South Coast of Espírito Santo. Karavan Seacrest Spe Cricaré S.A. Exploration of oil and natural gas in the Cri- caré Pole, which comprises 27 onshore oil fields. CAPÍTULO 4 OPORTUNIDADES PARA O ESPÍRITO SANTO Table 8 - Monitoring the sale of Petrobras assets in Espírito Santo Company Basin Teaser Location Norte Capixaba Center Onshore Aracruz Running 1,012 Anchieta, Piúma, Itapemirim, Marataízes and Presidente Kennedy Espírito Santo Basin Offshore Running 1,000 Conceição da Barra, Jaguaré, Linhares and São Mateus Running 1,000 Deepwa- ter ES Offshore Assets 100% of the fields of Cancã, Cancã Leste, Fazenda Alegre, Fazenda São Rafael and Fazenda Santa Luzia. In addition to the fields, the North Capixaba Terminal (TNC) was offered. 50% participation in block ES-M-596_R11 and 40% participation in blocks ES-M-598, ES-M-671, ES-M-673 and ES-M-743 100% of Golfinho, Canapu, Camarupim and Camaru- pim Norte fields and 65% of BM-ES-23 block 59 59 Quan- tity of assets Confronting Municipality Status Partner 6 Linhares, São Mateus and Jaguaré Sold сл 5 Vitória Binding Phase сл 5 Seacrest Capital Linhares Under ne- gotiation BW Of- fshore ESGÁS Subsea 7 3R Petroleum and DBO Energia Expand the distribution network by more than 292 thousand meters and connect more than 96 thousand new consumers. In Ubu, Subsea 7 will manufacture 126 km of rigid lines for the Búzios 8 subsea collection system. Investment in the areas of the Peroá Pole, the Cangoá Pole and the BM-ES-21 block (Malombe Discovery), all in the Espírito San- to Basin. Espírito Santo Planning 260 Anchieta Planning Aracruz and Linhares Running Total Source: ANP, IJSN, Petrobras, ESGAS and Brasil Energia. Elaboration: Industry Observatory/Findes 4.2. Sale of O&G assets Petrobras Divestment Plan aims to reduce the company's debt and maximize investments in assets with higher profitability, focused on oper- ating, for example, in the exploration and production of oil and natural gas in deep and ultra-deep waters. Since 2015, the company has started the process of selling a set of assets re- lated to the exploration and produc- tion of oil and natural gas. 8.772 In Espírito Santo, 52 areas were of- fered with 78.8% of the assets with the sale completed. In offshore, 14 areas were offered with 21.4% of the assets with the sale completed and in onshore, 38 areas were offered with 100.0% of the assets with the sale completed. Table 8 lists the as- sets and status of each project. Espírito Santo Basin Onshore 50% stake in blocks ES-T- 506 and ES-T-516 2 Linhares Sold Cowan Oil & Gas Espírito 3R Petrobras Santo Basin Peroá Cluster Offshore 100% of the fields of Peroá, Cangoȧ and Malombe 3 Linhares Sold Petroleu- me DBO Energia Polo Cricaré Onshore 100% of the fields of Biguá, Cacimbas, Campo Grande, Córrego Cedro Norte, Córrego Cedro Norte Sul, Córrego das Pedras, Córrego Dourado, Fazen- da Cedro, Fazenda Cedro Norte, Fazenda Queimadas, Fazenda São Jorge, Guriri, Inhambu, Jacutinga, Lagoa Bonita, Lagoa Suruaca, Mariricu, Mariricu Norte, Rio Itaúnas, Rio Preto, Rio Preto Oeste, Rio Preto Sul, Rio São Mateus, São Mateus, São Mateus Leste, Seriema and Tabuiaiá Onshore São Mateus, Conceição 27 Sold da Barra and Jaguaré Karavan Seacrest Spe Cricaré S.A. Lagoa Parda Center 100% of the Lagoa Parda, Lagoa Parda Norte and Lagoa Piabanha fields 3 Linhares Sold Imetame Campos Basin Campo Catuá Offshore 100% of the Catuá field 1 Anchieta In binding phase Source: Petrobras, Brasil Energia and Observatório da Indústria/Findes. Elaboration: Industry Observatory/Findes#3160 60 Figure 1 - Exploratory blocks on offer in the Permanent Offer in Espírito Santo YEARBOOK OF THE OIL AND NATURAL GAS INDUSTRY IN ESPÍRITO SANTO 2022 CAPÍTULO 4 OPORTUNIDADES PARA O ESPÍRITO SANTO 4.3. Permanent Offer Permanent Offer Exploratory block Fields in production UPGN Transport Pipeline Offloading pipeline 67 61 0 75 150 km AREAS ON OFFER IN The Permanent Offer is a con- cession modality in which there is the offer of exploratory blocks ESPÍRITO SANTO and areas with marginal accumu- CONCESSION REGIME 48 exploratory blocks: 20 blocks onshore 28 blocks on the sea side AREAS UNDER STUDY IN ESPÍRITO SANTO CONCESSION REGIME 25 exploratory blocks 25| 25 blocks onshore AREAS WITH MARGINAL ACCUMULATIONS Barra do Ipiranga Rio São Mateus Oeste, Mariricu Oeste Nativo Oeste Jacupemba Rio Itaúnas Leste lations. It consists of the conti- nuous offer of fields returned, or in the process of being returned, of exploratory blocks offered in previous bids and not auctioned or returned to ANP, ANP, besides the new exploratory blocks in ter- restrial basins under study at ANP. In December 2021, the National Energy Policy Council (CNPE) au- thorized the Agency to define and bid on Permanent Offer, under the concession regime, blocks in any land or sea basins, as well as bid on fields returned or in the pro- cess of being returned, including areas located in the pre-salt poly- gon or in strategic areas. Throughout the national territory, 1,010 exploration blocks located in 17 sedimentary basins are on offer under the concession regi- me for the Permanent Offer. In addition, 1,018 exploration blo- cks in 17 Brazilian sedimentary basins and 15 areas with margi- nal accumulations in 6 terrestrial basins are under study under the concession regime. The areas un- der study will be available for the Permanent Offer soon after the environmental opinions and the public hearing, promoted by ANP, are finalized. In Espírito Santo, 48 exploration blocks are in offers under the con- cession regime for Permanent Of- fering, 20 blocks in the land part and 28 blocks in the maritime part. These areas have received few drillings in the past and, the- refore, are associated with greater exploratory risk due to the scarci- ty of information. Figure 1 shows the area in permanent supply in Espírito Santo on land and sea. In addition to these, a total of 25 exploratory blocks are under stu- dy in Espírito Santo, all terrestrial (figure 2), and 6 areas with mar- ginal accumulations (figure 3). Among the areas with marginal accumulations under study are: Barra do Ipiranga, Rio São Ma- teus Oeste, Mariricu Oeste, Na- tivo Oeste, Jacupemba and Rio Itaúnas Leste, all located between the municipalities of Conceição da Barra, São Mateus, Jaguaré and Linhares. These areas were in concession with Petrobras and were returned to ANP in 2019. The areas are shown in Figure 3. Minas Gerais Espírito Santo Rio de Janeiro Source: ANP. Elaboration: Industry Observatory/Findes Figure 2 Exploratory blocks under study in the Permanent Offer in Espírito Santo Minas Gerais Espírito Santo Bahia Source: ANP. Elaboration: Industry Observatory/Findes Exploratory blocks in study Exploratory blocks Transport Pipeline Drainage Pipeline 0 25 50 km#3262 YEARBOOK OF THE OIL AND NATURAL GAS INDUSTRY IN ESPÍRITO SANTO 2022 Figure 3 - Areas with marginal accumulations under study for Permanent Offer Minas Gerais Espírito Santo Bahia Rio Itaúnas Leste Mariricu Oeste São Mateus Oeste Nativo Oeste Barra do Ipiranga Jacupenba Marginal fields under study Exploratory blocks in study Exploratory blocks Fields in production · Transport Pipeline ― Drainage Pipeline Source: ANP. Elaboration: Industry Observatory/Findes 0 25 50 km CAPÍTULO 4 OPORTUNIDADES PARA O ESPÍRITO SANTO Chart 29 - Facility Decommissioning Program (PDI) by basin (in units) Amazonas 1 Mucuri Parnaíba Outras 1 1 2 Tucano Sul 2 Solimões 2 Camamu 2 Potiguar 20 Sergipe Alagoas 5 4 Santos 8 Recôncavo 12 Espírito Santo 17 Source: ANP. Elaboration: Industry Observatory/Findes Campos 22 99 proposals for Facility Decommissioning Program (PDI) at ANP by 2022 PDI's 78 approved by ANP PDI's on 11 standstill (or stopped) PDI's received 4.4. Facility Decommissioning The decommissioning of facilities is the safe destination of oil and natural gas exploration and pro- duction structures after the end of their production phase. Among the activities are: the removal of facili- ties; the razing of wells; the proper disposal of materials, waste and tailings; and the environmental recovery of the area. The ANP ap- proves the definitive interruption of the facilities after all possibilities of exploration and production of the area have been exhausted. By 2022, ANP had 99 proposals for a Facility Decommissioning Pro- gram (PDI) in Brazil (chart 29), be- ing: 78 PDI's approved by the Agen- cy, 11 PDI's classified as suspended (or stopped), 6 PDI's classified as received and 4 PDI's classified as closed. In total, thirteen basins had PDI's approved by the ANP. Among them, 22 planes were located in the Campos Basin, 17 in the Espírito Santo Basin, 20 in the Potiguar Ba- sin, 12 in the Recôncavo Potiguar Basin and 28 nine other basins. For the state of Espírito Santo, 18 PDIs were approved, 17 referring to the Espírito Santo basin (all onshore) and 1 referring to the Campos basin in confrontation with the state, the FPSO Capixaba (table 9). Petrobras and SBM initiated the pro- cedures for the decommissioning of the unit, located in Parque das Baleias. With Petrobras' exit from the platform, the company intends. Petrobras intends to relocate the pro- duction of seven of the park's nine wells to the P-58 platform. With the complete decommissioning of FPSO Capixaba, Parque das Baleias will op- erate with 3 production units (P-58, P-57 and FPSO Cidade de Anchie- ta). The company's plan is to start operating the Maria Quitéria FPSO in 2024, a project that includes the company's intentions in the develop- ment of the New Jubarte Field. In 2022, the ANP approved the Fa- cilities Decommissioning Report (RDI) of the Cação field, located in the Espírito Santo Basin. After all infrastructure deactivation activi- ties are carried out, the oil company submits the report to the ANP, still dependent on approval. In 2022, the agency approved 6 RDI's, including: Cação, Catuá, Tatui, Gavião Real, Xe- relete, Xerelete Sul and FPSO Polvo. 4 PDI's closed 63 63#3364 YEARBOOK OF THE OIL AND NATURAL GAS INDUSTRY IN ESPÍRITO SANTOI 2022 Tabela 9 - Relação dos Programas de Descomissionamento (PDI) aprovados no Estado do Espírito Santo Environment Basin PDI Company Espírito Santo Espírito Santo Espírito Santo Espírito Santo Albatroz Barra do Ipiranga Corruíra Jacupemba Petrisyenergy Petrobras Petrobras Petrobras Espírito Santo Lagoa do Doutor Vipetro Espírito Santo Lagoa Parda Sul Petrobras Espírito Santo Mariricu Oeste Petrobras Espírito Santo Mosquito Petrobras Terra Espírito Santo Mosquito Norte Petrobras Espírito Santo Nativo Oeste Petrobras Espírito Santo Rio Barra Seca Petrobras Espírito Santo Rio Ibiribas Petrobras Espírito Santo Rio Itaunas Leste Petrobras Espírito Santo Rio Mariricu Petrobras Espírito Santo Rio Mariricu Sul Petrobras Espírito Santo Rio Preto Petrobras Mar Source: ANP. Elaboration: Industry Observatory/Findes Espírito Santo Campos Rio São Mateus Oeste FPSO Capixaba Petrobras Petrobras BRL 51.5 billion in investment will be generated by the decommissioning of 9,892 facilities throughout Brazil between 2022 and 2026 BRL 2.45 billion in investment will be generated by the decommissioning of 751 facilities in Espírito Santo between 2022 and 2026 Across Brazil, the decommissioning of 9,892 wells will generate BRL 51.5 billion in investment between 2022 and 2026. For Espírito Santo, the de- commissioning of 751 wells will gen- erate BRL 2.45 billion in investment in the same period, of which BRL 781.2 million in the Campos Basin and an- other 1.66 billion in the Espírito Santo Basin (chart 30). This total amount will be applied in the activities of permanent aban- donment (59.9%), removal of lines (23.2%), removal of facilities asso- ciated with Land Production Units (4.5%), environmental recovery (5.5%) and demobilization of Oil Ex- ploration Units (UEP) (7.1%) and well razing (0.2%). Chart 30 Total investments planned for the execution of the Facility Decommissioning Programs (PDI) in Espírito Santo (in millions of BRL) - 2022 to 2026 639.3 2022 392.1 329.1 253.8 2023 831.1 2024 2025 2026 Source: ANP. Elaboration: Industry Observatory/Findes#34GLOSSARY GLOSSARY A Adjacent pioneering exploratory well: well that aims to test the occurrence of oil or natural gas in an area adjacent to a discovery. B Barrel of oil equivalent (boe): barrel of oil equivalent (1,000 m³ of gas ≈ 6.28981 bbl) - measure that adds the volumes of oil and gas production nal studies for decision making, or intervention with a probe for reassessment, recompletion, restoration, abandonment, among others. D Declaration of commerciality: written notification from the concessionaire to ANP declaring a deposit as a commercial discovery in the concession area. Declaration of evidence of hydrocarbons: the con- cession contracts establish the deadlines and work programs for exploration and production activities. Ac- cording to these contracts, the concessionaire has the Barrel of oil per day (bpd): unit used to reference the obligation to notify the ANP of any discovery of hydro- daily production of barrels of oil. Bidding rounds: action organized by ANP, which aims at the auction between companies and/or consortia interested in acquiring exploratory areas in conces- sions or sharing. Brent: oil extracted in the North Sea and traded on the London Stock Exchange, being its international refe- rence price for oil. C Concession: modality of delegation of an economic activity by the government, usually through a compe- titive process, to an economic agent that proves capa- city for its performance, at its own risk and for a de- termined period. In Brazil, the administrative contract for the delegation is made by the ANP, which grants companies the exercise of oil and natural gas explora- tion and production activities in the Brazilian territory. Concessionaire: a company incorporated under Bra- zilian laws, headquartered and managed in Brazil, with which ANP enters into a concession agreement for the exploration and production of oil or natural gas in a se- dimentary basin located in the national territory. Coke: fuel derived from coal agglomeration and con- sisting of mineral matter and carbon, fused together. It is a solid and cohesive residue remaining from the destructive distillation of coal, petroleum or other car- bonaceous wastes and containing mainly carbon. Closed well: completed well that has already entered into production or injection operation, but is closed, awaiting normalization of surface conditions, additio- carbon or other mineral resources within the conces- sion area within 72 hours after the occurrence. Decommissioning: set of legal actions, techniques and engineering procedures applied in an integrated manner to a Pipeline, in order to ensure that its deacti- vation meets the conditions of safety, preservation of the environment, reliability and traceability of informa- tion and documents. Deep waters: ocean waters located at any distance from the coast with a seabed depth of 300-1,500 me- ters. Demolished well: permanently abandoned well in whi- ch there was the removal of all equipment related to the wellhead assembly and the cutting of the surface casing at the bottom of the ante well. Development plan: is the instrument of development and production planning, covering the entire life cycle of the oil field. It describes the activities and invest- ments that will be carried out, so that all other medium- and short-term plans will have to be consistent with it. E Exploration phase: aims to discover and evaluate oil and/or natural gas deposits. Exploratory activities in- volve the acquisition of seismic, gravimetric, magne- tometric, geochemical data, drilling and evaluation of wells, among others, and must necessarily include compliance with the Minimum Exploration Program (PEM) agreed with ANP. Extraction: set of coordinated operations to extract oil or natural gas from a deposit and prepare for its mo- vement. Exploratory Block: geographically delimited areas re- ferring to a sedimentary basin, where oil and natural gas exploration activities are developed. Exploratory injection well: well that aims at injecting fluids into the reservoir with the objective of improving the recovery of hydrocarbons. Exploratory production well: well that aims to drain one or more deposits from a field. Exploratory well for deeper prospect: well that aims to test the occurrence of accumulations or favorable geological conditions deeper in a given area. Exploratory well for shallower prospect: well that aims to test the occurrence of accumulations or shallower fa- vorable geological conditions in a given area Extension exploratory well: well that aims to delimit the accumulation of oil or natural gas and/or investi- gate contact between fluids, communication between regions of a reservoir, and properties that allow it to be characterized. F Fields returned: area returned to ANP made through the Area Return Notification. The act of returning the field implies the interruption of all exploration activities in the returned portion, except for the activities of de- activation of facilities and environmental recovery. Financial Compensation: amount due to the states, municipalities and the Federal Government for the use of natural resources, since these entities are affected by the exploration and production activity. G Government Participations: payments to be made by concessionaires of oil and natural gas exploration and production activities, pursuant to arts. 45 to 51 of Law No. 9.478, of 1997, and Decree No. 2.705, of 1998. H Hydrocarbon: A chemical compound consisting only of carbon and hydrogen atoms. Oil and natural gas are examples of hydrocarbons. Injecting well: well operating as a fluid injector to im- prove the recovery of hydrocarbons from the reservoir. Injecting well for storage: well operating as a fluid in- jector for storing natural gas. M Marginal fields: inactive areas in which there was no production of oil and/or natural gas or production was interrupted due to lack of economic interest. Mature Basin: sedimentary oil basin whose produc- tion is already in decline. Mature fields: oil fields whose production is already in decline. Minimum Exploration Program (PEM): exploratory activities to be compulsorily fulfilled by the concessio- naire during the exploration phase, being defined by the ANP, according to evaluation criteria of the areas to be explored. N National Agency of Petroleum, Natural Gas and Bio- fuels (ANP): regulator of the oil, natural gas and bio- fuels market in Brazil, with the exception of the regula- tion of natural gas distribution, whose sphere is state. Notification of area return: written communication, made by the Concessionaire to ANP, of the return of areas, under the circumstances provided for in the Agreement, which contains the list of Reversible As- sets existing in the portion to be returned and the de- limitation of the polygon of the areas to be retained. Offshore: marine environment and land-sea transition zone or area located at sea. Oil: any and all liquid hydrocarbons in their natural sta- te, such as crude oil and condensate, whose explora- tion and production is regulated by Law No. 9.478, of 8/6/1997.#35GLOSSÁRIO Oil consumption: activity consisting of the use of cru- de oil for the manufacture of petroleum products. Oil fields: area producing oil or natural gas, from a continuous reservoir or from more than one reservoir, at variable depths, covering facilities and equipment intended for production. (Source: Law No. 9.478, of 8/6/1997). Oil refining: activity developed by an industrial unit that uses as raw material the oil coming from the ex- traction and production unit of a field and that, through processes that include heating, fractionation, pressu- re, vacuum and reheating in the presence of catalysts, generates petroleum derivatives from the lightest (re- finery gas, LPG, naphtha) to the heaviest (bunker, fuel oil), in addition to solid fractions, such as coke and as- phalt residue. Oil Production: set of coordinated operations to ex- tract oil or natural gas from a deposit and prepare its movement, as defined in item XVI of art. 6 of Law No. 9.478, of 1997, or also volume of oil or natural gas extracted during production, as can be seen from the text, in each case. Oil production chain: set of activities of the produc- tion chain from the extraction of crude oil to the last phase of value addition of the sector, segmented into four branches: exploration, refining, petrochemical in- dustry and processing industry. in the contract, being applicable, successively, to the exploration, development and production phases. The determination of this value is made by the ANP and takes into account the geological characteristics and the location of the sedimentary basin; (ii) monthly, by multiplying the equivalent of 1% of the field's total oil and natural gas production volume, during the calcula- tion month, by their respective reference prices. Permanent offer: continuous offer of fields returned (or in the process of being returned) and exploratory blocks offered in previous bids and not auctioned or returned to the agency (Article 4 of CNPE Resolution No. 17, of 06/08/2017). Permanently abandoned well: well where there is no interest in future re-entry and operations were conduc- ted for the establishment of solidary sets of perma- nent barriers. Petroleum derivatives: products resulting from the processing of petroleum. Pre-salt: subsurface region formed by a vertical prism of indeterminate depth, with a polygonal surface de- fined by the geographical coordinates of its vertices established in the Annex of Law No. 12.351/2010, as well as other regions that may be delimited in an act of the Executive Branch, according to the evolution of geological knowledge. Production phase: the one in which oil and/or natu- Oil well: drilling into the earth's surface used to produ- ral gas accumulations discovered and which have had ce oil and/or natural gas. Onerous assignment: model of assignment of an exploratory area to Petrobras bilateral negotiation, through the consideration of the payment of a certain amount, which was regulated by Law No. 12.276, of June 30, 2010, limiting exploration up to 5 billion boe. Onshore: terrestrial environment or area located on land. P Payment for area occupation or retention: amount paid by concessionaires to landowners where oil and natural gas exploration and production activities are carried out. This payment is made in two ways: (i) an- nual, by means of unit values in reais per square kilo- meter of the concession area fixed in the notice and their commercial viability proven give rise to a produ- cing field, being developed and put into production to supply the market. Production Sharing: model of exploration and pro- duction of oil, natural gas, which provides not only the payment of royalties, but also the physical division of the production of hydrocarbons discounting the cost incurred in exploration and production activities. It is currently regulated by Law No. 12.351, of 12/22/2010. Production Unit (Exploration and Production): set of facilities designed to promote the separation, treat- ment, storage and flow of fluids produced and moved in an oil and natural gas field. Proven reserves: amount of Oil or Natural Gas that the analysis of geoscience and engineering data indi- cates with reasonable certainty that it is an economi- cally viable well, whose investments are recoverable commercially. R Repeatable: these are goods under a special customs regime of export and import, which are intended for research and mining activities of oil and natural gas deposits, with suspension of customs taxes. S Sedimentary basin: depression of the earth's crust where sedimentary rocks accumulate that can be car- riers of oil or gas, associated or not. Shallow waters: ocean waters located at any distance from the coast with a depth of the seabed of 0-300 meters. Signature bonus: resource offered by the winning bi- dder in the proposal to obtain the concession for the exploration of oil or natural gas, and may not be lower than the minimum value established in the bid notice. Т Temporarily abandoned well without monitoring: well where there is interest in future re-entry and ope- rations were conducted for the establishment of soli- darity sets of unmonitored and/or verified barriers. U Ultra-deep waters: ocean waters located at any dis- tance from the coast with depth of the seabed greater than 1,500 meters. Upstream: segment of the oil industry that includes the activities of exploration, development, production and transportation of oil to refineries. W Well operating for disposal: well operating for dis- posal of fluids produced by other wells or disposal of various effluents generated in exploration and produc- tion activities, in areas that do not produce at that time. Well producing: well operating as a hydrocarbon producer. Part of this resource is allocated to the Union and part Well producing and injecting: well operating simulta- to the ANP; Special Participation: constitutes extraordinary finan- cial compensation due to the Federal Government, States and Municipalities, according to ANP Resolu- tion No. 12/2014, by oil or natural gas exploration and production concessionaires, in cases of large produc- tion volume or high profitability. Special well: well that aims at specific objectives that do not fit the purposes previously defined. Storage Well: well that aims to allow natural gas sto- rage operations, including injection, withdrawal and monitoring. Stratigraphic exploratory well: well that aims to know the stratigraphic column and obtain other surface ge- ological information in a basin or region little explored; neously producing hydrocarbons and injecting fluids (at distinct intervals). Well removing stored natural gas: well operating for the removal of natural gas from a storage reservoir. Well temporarily abandoned with monitoring: well where there is interest in future re-entry and opera- tions were conducted for the establishment of solidary sets of barriers, which must be periodically monitored and/or verified. Well under observation: well instrumented for monito- ring pressures in a hydrocarbon producing reservoir or natural gas storage. WTI (West Texas Intermediate): Oil extracted from the Permian Basin in western Texas and eastern New Mexico, traded on the New York Stock Exchange. Its quotation serves as an international reference for the price of oil.#36REFERÊNCIAS ANP. 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Available at: <https://www.bp.com/content/dam/bp/business-si- tes/en/global/corporate/pdfs/energy-economics/sta- latorios-e-eventos/apresentacoes/>. Accessed on: December 2022.#37Empty#38Empty#39Empty#404 FINDES SENAI observatóric POR VOC PELA INDÚSTRIA PELO ESPÍRITO SANTO PELO FUTURO DO TRABALHO Fórum Capixaba de Petróleo, Gás e Energia SEBRAE Support da indústria ONIP Organização Nacional da Indústria do Petróleo ibp INSTITUTO BRASILEIROGE PETRÓLEO E G