RIO DE JANEIRO—Brazil’s 15th licensing round was deemed a great success by the Brazilian government, oil company executives and experts who attended the event March 29.
Twenty-one companies registered to bid during the round. The Campos Basin, the oldest and most prolific basin in Brazil, and U.S. major ExxonMobil Corp. were the stars of the event, repeating the performance seen in the 14th licensing round in September 2017.
Of 47 offshore blocks offered, 22 of them were acquired March 29. The round raised more than 8 billion reais (US$2.42 billion) in signature bonuses, the largest in the history of bidding rounds of this type in Brazil.
The results and the government revenue raised are a testimony to the prospectivity of the acreage and the regulatory improvements put in place over the past two years, said Horacio Cuenca, research director, upstream Latin America, for Wood Mackenzie.
“Brazil succeeded in attracting a more diverse group of majors and large E&Ps and drew bids to its less established basins,” he added.
According to Brazil’s oil and gas regulator, ANP, the auction will generate investments of at least 1.2 billion reais (US$363 million) during the first exploration phase of the concession contracts alone.
“The auction exceeded all expectations. We had diversity of operators, geographic diversity and remarkable bonuses. The most important news is the resurgence of the Campos Basin, which has experienced a period of disruption in the offering of areas,” said Décio Oddone, head of ANP. “The importance of the basin was reestablished in the 14th bidding round, with high bonuses, and now we have the confirmation with all its blocks acquired. It shows this basin’s high potential.”
The round’s outcome gave Brazilian members of the government some relief. Days before the round, which was seen as a test of the attractiveness of Brazil’s oil and gas sector, two concerns surfaced— a bill that could end a special customs regime issued by Brazil’s energy ministry relating to the import of equipment used in oil exploration, drilling and production; and the decision by Brazil’s Federal Court of Accounts TCU to block the inclusion of two top quality blocks in the March 29 auction.
According to Brazil Oil and Gas Secretary Marcio Felix, the signature bonus total value could have exceeded what was paid if the TCU had not decided on March 28 to withdraw two areas from bidding. On April 2 the head of the ANP will meet with members of the TCU to discuss what needs to be done concerning the sale of the areas.
Campos Basin Stars Again
ExxonMobil acquired eight blocks along with its consortium partner, the largest numbers of blocks acquired among the companies who participated in bidding. ExxonMobil will be the operator in six of the blocks.
“As expected, ExxonMobil and Petrobras dominated the round,” Cuenca said. “Petrobras did not present bids in the Santos Basin but partnered with ExxonMobil and Statoil to win the two blocks adjacent to Dois Irmaos (a presalt area to be auctioned in Round 4), paying the second-highest individual bonuses of the round (US$1.1 billion together).”
The round’s highest bid came from a consortium that comprises ExxonMobil, Petrobras and QPI of Qatar for block C-M-789, which it one with a bonus of roughly 2.8 billion reais (US$ 849 million). Currently, ExxonMobil has a participation in 24 offshore blocks in Brazil.
The round’s highest bid came from a consortium that comprises ExxonMobil, Petrobras and QPI of Qatar for block C-M-789, which it one with a bonus of roughly 2.8 billion reais (US$ 849 million). Currently, ExxonMobil has a participation in 24 offshore blocks in Brazil.
For ExxonMobil Brazil CEO Carla Lacerda, the major’s performance showed the company’s confidence in Brazil. She pointed out three aspects that contributed to the company’s decision to expand its investments in the country:
- The exploratory potential of the blocks acquired;
- Regulatory reforms that were recently implemented by the Brazilian government; and
- The strength of the partnership with other majors such as Petrobras and the Norwegian state-owned Statoil.
“We want to establish a more robust portfolio in Brazil. We are more confident in investments in the country. There are several opportunities ahead and we are analyzing every round,” Lacerda said after the round. “Now we are going to work to implement a robust operational program, seismic data acquisition and well drilling to generate results.”
Petrobras CEO Pedro Parente agreed with the great potential for E&P activities in the Campos Basin. The company picked up the second highest number of blocks—seven. The Brazilian major has invested most in the Campos Basin, acquiring four blocks along with other companies. “Those areas showed they have good prospects. Our acquisitions reflect the new profile of the company that work to be more selective,” Petrobras CEO Pedro Parente said.
Statoil, which is also working to strengthen its position in Brazil, acquired four Campos Basin blocks—C-M-709, C-M-657 (along with Petrobras and ExxonMobil), C-M-755 and C-M-793 (along with BP).
“The award in Brazil’s 15th bidding round reinforces Statoil’s ambition of long-term growth in Brazil and strengthens the company’s position in the prolific Campos Basin,” said Tim Dodson, executive vice president for Exploration in Statoil. “We are very pleased with the outcome of this round. We are looking forward to working with our partners to pursue these exciting exploration opportunities.”
Along with the optimism toward the Campos Basin, the head of ANP also highlighted the performance of other Brazilian offshore basins. “We saw the strengthening of the Sergipe-Alagoas Basin and the resumption of the Potiguar Basin as an attraction pole for operators.”
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