Participation in FPSO Business for Petrobras in Brazil to Produce Oil in Pre-salt area

July 15, 2011

ITOCHU Corporation (headquartered in Minato-ku, Tokyo; Masahiro Okafuji, President & CEO; hereinafter “ITOCHU”) and Nippon Yusen Kabushiki Kaisha (headquartered in Chiyoda-ku, Tokyo; Yasumi Kudo, President; hereinafter “NYK Line”) are pleased to announce that an international joint venture (JV) of companies to own and operate a Floating, Production, Storage and Offloading system (FPSO*1) together with SBM Offshore N.V. (SBM; Netherlands) and Queiroz Galvão Óleo e Gás S.A (QGOG; Brazil) has been established and that the contracts for the twenty year charter and operation of the FPSO for the development of the Lula Nordeste field*2 in the pre-salt area*3, offshore Brazil, have been executed with the BM-S-11 consortium (65% Petrobras SA – Operator, 25% BG Group (BG E&P Brasil Ltda), and 10% GALP Energia (Petrogal Brasil Ltda)). NYK Line has since become officially involved in the operation of the FPSO by dispatching staff to the FPSO as well as to an operational office ashore.

A secondhand very large crude oil carrier (VLCC) is currently being converted into the FPSO by SBM and shall be named the FPSO Cidade de Paraty and be deployed in the Lula Nordeste field. Currently, the hull and marine systems of the VLCC have been upgraded in Singapore, and after such upgrades, the topsides modules will be lifted and integrated on the FPSO in Brazil. It will start oil production in the Lula Nordeste field in the second quarter of 2013.

NYK Line and ITOCHU are also pleased to announce that together with its JV partners SBM and QGOG, a Limited Recourse Project Loan has been secured for US$1 Billion to finance the construction of the FPSO from a syndicate of banks comprising 12 Japanese and International Commercial Banks.

NYK Line and ITOCHU try to expand and develop the business in the offshore oil and gas industry, especially in Brazil where remarkable growth is expected through the participation in this FPSO project.

“FPSO Cidade de Paraty” image (CG)

Outline of FPSO

Oil processing Capacity 120,000 barrels of oil per day
Gas processing capacity 5,000,000 standard cubic feet per day
Oil storage capacity 1,600,000 barrels
Water injection capabilities 150,000 barrels
Mooring Type Spread Mooring

Controlling stake

NYK Line 17.5%
SBM 50.5%
QGOG 20.0%
ITOCHU 12.0%

SBM Offshore N.V.

The SBM Offshore N.V. group is a multinational group of companies selling systems and services to the oil and gas industry and the largest FPSO owner and operator in the world. SBM Offshore N.V. has been listed on the Amsterdam Stock Exchange since 1965, and it has developed its business with the offshore oil and gas producing companies both private and state owned. Employees: over 5,700; total assets: 5,090 million dollars; sales: 3,055 million dollars; net income: 276 million dollars (on a consolidated basis ended December 2010)

Queiroz Galvão Óleo e Gás S.A. (QGOG)

QGOG is a 100% subsidiary of Queiroz Galvão S.A which is one of the largest Brazilian conglomerates founded in 1953. QGOG is engaged in the provision of services to the Brazilian oil and gas industry in the areas of drilling and FPSOs. QGOG has been the largest drilling contractor in Brazil since the 1980’s.

  1. FPSO is a ship-shaped offshore installation to produce crude oil by separating solids, water, and gases from liquid drawn from reservoir beneath seabed, and storing it until offloading to shuttle tankers or export tankers.
  2. The Lula Nordeste field is located in block BM-S-11 in the Santos basin at approximately 265 kilometers offshore and 2,100 meters water depth.
  3. Pre-salt means the oil layer under a salt layer, about 5,000 meters beneath the seabed.