Brazil collects US$2.4bn in record oil auction

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Thursday, March 29, 2018

The Brazilian government cashed in some 8bn reais (US$2.4bn) in signature bonuses as oil companies acquired 22 of the 47 offshore blocks offered in Thursday's 15th bidding round in Rio de Janeiro.

This was the highest amount ever posted for oil concession tenders, superseding the 3.8bn reais achieved in the 14th round in 2017.

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With eight areas, US major ExxonMobil took the most among the 12 winning companies, confirming its growing interest in Brazil.

Leading a consortium formed by state-run Petrobras and Qatar Petroleum International, Exxon also posted the highest signature bonus for an area in the tender, offering 2.8bn reais for block C-M-789 in the Campos basin.

"We are more confident to invest in Brazil. We're building a strong portfolio here and there will be new opportunities ahead," ExxonMobil's country manager Carla Lacerda told journalists.

Petrobras took five other blocks as operator: three in the Potiguar basin (alone and in partnership with Shell) and two in the Campos basin alongside Shell and Norway's Statoil.

"These are high potential areas, which explains the premiums seen. The auction demonstrated that Brazilian deepwater is very attractive, despite the US shale offer," Petrobras CEO Pedro Parente said.

The auction also marked the return of Germany's Wintershall to Brazil, with the oil company presenting the winning bid for three blocks in the Potiguar basin and one block in the Ceará basin. It also gained access to three Campos basin blocks in consortium with Chevron and Repsol.

Wintershall's local representative Gerhard M. Haase told journalists the company intends to keep a well-balanced portfolio in Brazil. "We'll be evaluating farm-in proposals to expand our portfolio here," he said.

Shell and BP Energy complete the list of companies that acquired assets as operators, with the first presenting the best offer for one block each in the Potiguar and Campos basins and the latter for two Campos basin blocks.

Portugal's Petrogal partnered with Shell on block C-M-791in the Campos basin.

Queiroz Galvão E&P (QGEP) was the only Brazilian company besides Petrobras to win areas. Alongside ExxonMobil (operator) and Murphy Oil, the firm took two blocks in the Sergipe-Alagoas basin.

Offshore assets sold at the auction stretch across 16,400km2 and minimum investment commitment to explore them was 1.2bn reais.

ONSHORE

None of the 21 onshore blocks offered received proposals, which, according to watchdog ANP's general director Décio Oddone was probably due to Petrobra's onshore divestment program (Topázio).

"This is provoking the attention of investors. Today's result reflects this situation," he explained.

Oddone added that onshore blocks will increasingly be tendered under the permanent offer regime, which might also be applied to areas inside the pre-salt polygon that do not receive offers in production sharing rounds.