Barcelona — Galp, Portugal's largest oil and gas company, has pared back its forecast for upstream volume for the next two years on late startups in two of its Brazil offshore units, the company said Monday.
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The company sees overall upstream working interest production from its existing portfolio growing 8%-12% in 2019, from 107,000 b/d of oil equivalent in 2018. This misses the total under Galp's previous plan, as it has had to adjust output from the Lula and Iara fields due to the later startup of the P67 and P68 units.
P67, which is the ninth floating production, storage and offloading vessel (FPSO) and the third replicant unit to start operations at Lula started production on February 1, according to the company. While it had been initially programmed to start in the summer of 2018, CEO Carlos Gomes da Silva told analysts on a conference call Monday, the unit was delayed in deployment from the construction yard in China.
Galp holds a 10% stake in the consortium developing the BM-S-11 block where the unit is deployed.
The floating units are budgeted to hit full plateau within 15 months, although the more recently installed units have been at full flow within 11 months, he said.
The P67 can process up to 150,000 b/d of oil and 6 million cu m of natural gas a day.
The P68 unit, slated for deployment in Iara is currently undergoing finishing work in Brazil, but should be deployed and producing first oil in the second half of 2019, having initially been slated for first oil in 2018.
For 2020, the company estimates upstream production will increase at a compound average growth rate of 12%-16% compared with 2018, again falling short of its previous target of around 17%, which would take output to 150,000 boe/d by 2020.
The company's 2018 annual production growth of 15% was already at the lower end of its forecast.
However, beyond 2020, increased production in Brazil and new production in Mozambique should start to have a greater impact. The company expects to beat the targets from its previous plan by 2025 and post a compound annual growth rate of more than 10% through to 2030, using a reference of $25/b net present break-even value.
The company outlined two major factors that would contribute to increased growth.
The first is the increase in the size of the first two trains to be used in Rovuma, Mozambique - to 7.6 million mt/year from 5 million mt/year.
A final investment decision is expected on the first development phase of this project during this year, the company said.
The second would be at Greater Carcara, Brazil, where the company has agreed to boost its stake to 20% and where the size of the producer vessel has been increased to a 220,000 b/d from a 180,000 b/d unit.
First oil is expected at that site in either 2023 or 2024, Gomes da Silva said.
The company said it boosted proven and probable reserves, including best estimate of contingent resources, to 2.4 billion boe in 2018, up 15%. This was aided by upward revisions in Brazil and Mozambique, the securing of the 20% stake in Carcara, Brazil, and accessing new high-potential prospective pre-salt blocks at Uirapuru and CM 791.
In the downstream segment, the company sees its refining margin rising to $5-$6/b in 2019 and to $6-$7/b in 2020, from $5/b in 2018.
The upward revision is due to a series of factors, according to Gomes da Silva, which include a shortage of middle distillates coinciding with an uptick in demand.
Besides that, the 2020 IMO requirements for blending marine diesel are bullish for diesel cracks, he said, while increased demand for jet fuel was outpacing demand for other products.
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