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Oil & gas: Are patents the light at the end of the Pre-Salt tunnel?

by André VenturiniAlexandre Tombini, President of the Brazilian Central Bank, has recently announced that the latest drop to USD 55 in oil barrel prices will have a positive impact of up to USD 10 billion in 2015 Brazil’s balance of trade. Forced by the slow pace in world’s economy, the ongoing changes in the US energy matrix and Saudi Arabia’s decision not to cut oil production, it seems that barrel prices will remain low for some time before returning to the previous baseline of USD 100.That may sound as good news for the Brazilian Government, but not for Petrobras, Brazil’s national oil company, which relies on what is known as the “pre-salt zone” as a salvation. With these oil prices, heaven is now further away.The pre-salt zone is an offshore region covering some oil & gas fields located at ultra-depths of around 7km. Recent studies indicate the enormous potential of those fields, likely to have 100 billion barrels of oil to be exploited. If true, this would make the Brazilian oil reserves the fifth largest in the world. This is a breath of hope for the country’s oil production, which has stagnated at 2,1 million BOE/d (barrels of oil equivalent per day) until 2013.However, taking oil out of those fields is a true challenge. Not only because of the depths and the massive water column between the surface and the sea bed. Technical difficulties are everywhere, like in reservoir characterization and geomechanics, well engineering, flow, and logistics.As a consequence of all of these technical barriers, production of the pre-salt oil is expensive. Petrobras has recently stated that the Brazilian pre-salt would still be profitable up to a barrel price of around USD 45. In view of this, technology is not only needed to allow a successful operation in those fields, but also a hopeful attempt to make this operation more profitable.Another aspect of worry is that, even if everything goes right, and oil is successfully produced out of the pre-salt zone, Brazil will not be able to refine it. According to numbers from the Brazilian Oil Agency, nearly 40% of the production would remain in its crude nature.IP practitioners might agree that whenever we face such technological gaps we are actually facing interesting business opportunities. Companies that arrive first at solutions to the pre-salt challenges and file for patent protection in Brazil could probably be capturing important market shares.Taking the US as an example, shale gas production increased by nearly 1600% from 2004 to 2014, accounting for 39% of the country’s total natural gas production. This is a consequence of investments made in research, particularly in fracking and horizontal drilling technologies. Patent filings followed the same increasing trend. Number of filings of fracking related applications, for instance, rose 270% from 2004 to 2012.In Brazil, official pre-salt announcement was made in 2007. Production of oil from the pre-salt zone increased significantly, reaching a daily average of 411 thousand barrels and accounting for 20% of Brazil’s total production in May 2014. Patent filings for oil & gas related technologies, in turn, experienced a significant increase of 100% from 2007 to 2012.Companies like GE, Siemens, Schlumberger, Baker Hughes and BG seem to agree that an appealing market is rising in Brazil. All of them have established R&D centers in Rio de Janeiro, with focus on the pre-salt. However, it is not clear whether the recent developments in the oil market might have been predicted by them years ago. The low barrel prices can impact those companies’ activities.Patents may again play an important role on this landscape. It might be possible, for instance, to reach some conclusions as to the interest on the Brazilian pre-salt oil from the patent filing activities in the country over the next years. The future of the pre-salt in Brazil is counting on smart solutions that can come out by means of patents.If you have any questions or need additional information, please contact us at

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