The natural gas and ESG plans of Repsol Sinopec in Brazil

Repsol Sinopec Brasil is completing 25 years of presence in Brazil, where it started operating in partnership with national oil company Petrobras. 

The highlight is block BM-C-33, where it holds a 35% stake, alongside operator Equinor (35%) and Petrobras (30%), and where production is expected to start this decade. 

The group's main objective for Brazil in the coming years is to boost natural gas production and sales in the domestic market, while sharpening its ESG focus.  

To find out more about these plans, BNamericas interviewed the company's gas sales manager, Andrés Sannazzaro, and its communications and external relations manager, Beatriz Giacomini.

BNamericas: How were the negotiations with Petrobras regarding access to its pipeline and processing systems? Was some mediation by sector regulator ANP necessary?

Sannazzaro: A booklet of best practices was prepared with the help of IBP [the Brazilian institute of petroleum, natural gas and biofuels], and there were many discussions among all the parties involved. It’s very important for the gas producers to be a part of these agreements because they affect not only the production of gas but also the potential level of reinjection of gas and, with that, the production of oil. Everything is interconnected. 

BNamericas: What are the main benefits for Repsol Sinopec with the start of the shared access agreements with Petrobras?

Sannazzaro: Basically, it allows us to sell our gas. A key date was January 1 of this year, when we not only gained access to the pipeline system, but also to the transportation network. This allowed us to access the gas distributors and sell our fuel.

BNamericas: What’s the volume of gas being sold in Brazil by the company today? And is there room for growth?

Sannazzaro: The volume varies a lot because it depends on the capacity we have available. Today our production comes mainly from the Sapinhoá field and, looking to the future, we have BM-C-33, also known as Pão de Açúcar. This is a project that will bring a large amount of additional gas. The capacity of the gas pipeline will be 16Mm3/d [million cubic meters per day], a significant volume considering the conditions of the Brazilian market. Today we’re importing 20Mm3/d from Bolivia, to have an idea. 

BNamericas: So the development model for BM-C-33 will necessarily include a pipeline.

Sannazzaro: Yes. We have gone through the conceptualization stage of the venture, where we have defined, for example, that the gas will be processed in the FPSO and that the landing point will be in Cabiúnas [Macaé terminal, in Rio de Janeiro state]. 

BNamericas: If the gas will be treated on the platform itself, the gas from BM-C-33 will not require an onshore processing unit, correct?

Sannazzaro: Correct. We’ll make a bypass through Cabiúnas [where there’s a Petrobras gas processing plant] to get to the transportation system. 

BNamericas: What’s the expected date for the startup of the project?

Sannazzaro: Since we have not made the final investment decision, the date is not yet certain. But we estimate something around 2027, 2028.     

BNamericas: Has Repsol Sinopec signed gas supply contracts with distributors?

Sannazzaro: We’ve closed deals with Galp, which has contracts with distributors. 

BNamericas: What measures related to energy transition and the ESG agenda is Repsol Sinopec implementing in Brazil?

Giacomini: Our focus is on oil and gas exploration and production. We have a global decarbonization plan, with emissions reduction targets, new businesses in renewable energies, seeking an increasingly diversified portfolio and prioritizing upstream projects with more added value around the world, and Brazil is one of these key markets for the company. 

BNamericas: Why?

Giacomini: We’re celebrating 25 years in Brazil. We were pioneers in the E&P market, closing a partnership with Petrobras in the Albacora Leste field. Brazil is a country that has a stable situation, it’s promising, especially in the pre-salt with an oil that comes with high profitability conditions. Here we have producing fields that add a lot of value to the global portfolio and future developments, such as BM-C-33, which should be the main promise for natural gas. And this connects perfectly with Repsol's global strategy, which already has most of its reserves and production based on gas, which is our main bet in terms of energy resources. 

We also have the Sagitario project, which is in its initial phase. 

Meanwhile, we’re developing a series of innovation and technology projects in Brazil, the group's largest investment outside Europe, where we have our Techlab [Repsol Technology Lab]. 

BNamericas: I suppose these are investments associated with the ANP's R&D clause, with mandatory investments based on revenues from the production of oil and gas in Brazil.

Giacomini: In Brazil, yes. Repsol uses this to its advantage. For example, in the sustainability plan by directing part of its investment to solve sustainability-related problems. Two years ago we inaugurated a line aimed at CO2 management even before the ANP made its clause more flexible regarding the profile of projects that could receive investments. 

And we have a legacy of voluntary environmental investments, such as a project in partnership with the Brazilian navy and fishing communities to encourage a safety culture. We also developed a partnership with SOS Mata Atlântica [environment-focused NGO] for the reforestation and conservation of protected areas along the coast. Now we’re evaluating how to adapt all this culture that we have incorporated to the new challenges of CO2 management.  

BNamericas: How does Repsol Sinopec view the development of the carbon credit market in Brazil?

Giacomini: We have listened, observed, and participated in different discussion forums, but we haven't made any decisions yet. We’re evaluating all the opportunities. 

BNamericas: Even though you’re not operators of fields in Brazil, does Repsol Sinopec tend to suggest operational improvements in the projects where you participate to mitigate environmental impacts?

Giacomini: It’s part of the day-to-day management of a field that the partners discuss different possibilities for the business. This is a normal contribution process, and Repsol seeks to share best practices, suggest ideas, etc. 

BNamericas: Could you give some examples of your research, development and innovation projects that have been approved by ANP?

Giacomini: The most recent is a project called DAC.SI, a technology to capture CO2 directly from the air that’s being developed at Repsol's Teclab in Madrid. This solution will be implemented in different countries, and Brazil was the first to sign a partnership outside Spain for a technology like this in partnership with the PUC-RS [university], with an initial investment of 60mn reais. 

Another example is CO2CHEM, which uses the CO2 produced within a process at a field to generate sustainable hydrocarbons [without greenhouse gas emissions].