Page 9 - LatAmOil Week 45 2019

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Brazil’s offshore pre-salt zone (Image: WoodMackenzie/PetroView)
Brazil racks up more disappointment
as most oil firms avoid PSC bidding round
BRAZIL’S National Agency of Petroleum, Natu- ral Gas and Biofuels (ANP) has suffered another major disappointment, as investors stayed away from yet another round of auctions.
ANP staged two bidding rounds last week, on November 6 and 7. The first of these, which covered four transfer of rights/surplus produc- tion-sharing licences containing at least 15bn barrels of oil in the pre-salt zone, drew only two bids. Petrobras, the national oil company (NOC), made an offer for Itapu, the smallest of the blocks. It also teamed up with two state- owned Chinese firms to bid for Buzios, the larg- est of the four.
The other bidding round covered five pre-salt blocks eligible for development under produc- tion-sharing contracts (PSCs). It attracted only one bid, with Petrobras and China National Oil and Gas Exploration and Development Corp. (CNOGEDC) , a subsidiary of China National Petroleum Corp. (CNPC), offering a signature bonus of $1.25bn for the Aram block in the San- tos Basin.
ANP had said previously that it was optimis- tic about the outcome of the PSC bidding round, not least because the number of companies reg- istering to participate had hit a record high level of 17. The list included international majors such as Norway’s Equinor, as well as less promi- nent investors such as a subsidiary of Portugal’s
Galp.
But there were some troubling signs ahead
of the auctions. Several prominent oil execu- tives said their companies would not participate in these despite being authorised to do, citing concerns about the high price of the assets. For example, BP’s CEO Bob Dudley described the biddingroundas“veryexpensive.”
Nevertheless, Brazilian officials expressed some surprise. Decio Oddone, the director-gen- eral of ANP, pointed out that even Petrobras had held back, as it bid for only one of the blocks for which it had exercised its pre-emptive bidding rights.
“We are also starting to see changing of pri- orities. Companies are concentrating on making the most of investments already made, and get- tingreadytodrillwellsandsuch,”hesaid.“This is natural in any basin in the world.”
Bento Albuquerque, Brazil’s Minister of Mines and Energy, said that the government would have to respond by changing its approach to the licensing rounds.
“We will be looking at ways we can improve the way we offer acreage and we plan to offer these areas to the market again, together with Sepia and Atapu [the fields left over from the transfer or rights auctions], and do so in a way that makes the best use of Brazil’s wealth,” he said. ™
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