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GlobalData sees more IOCs entering Brazil’s Pre-Salt zone as operators
BRAZIL is likely to start seeing a wider range of companies serving as operators of upstream oil and gas projects in the short term, according to GlobalData, a London-based data analytics and consulting company.
In a statement posted on its website, GlobalData said that bringing more interna- tional oil companies (IOCs) on board to oper- ate fields in the Pre-Salt region would reduce the risk of offshore development.“Increasing the number of operators will create a more eco- nomically resilient Pre-Salt oil and gas sector, because it wouldn’t be linked to the financial performance of just one company, which in [the event] of financial difficulties could be forced to postpone projects,” explained Alessandro Bacci, an oil and gas analyst for the consultancy.
Bacci also pointed out that Brazil’s National Agency of Petroleum, Natural Gas and Biofuels (known as ANP) hoped to attract new investors in the three licensing rounds that are scheduled to take place this autumn. This is in line with the goals of the national oil company (NOC) Petro- bras, which wants to raise oil output by 1mn bar- rels per day (bpd) by 2025.
“The financial position of Petrobras has opened up additional opportunities, and there is an interesting alignment between the ANP’s and the IOCs’ goals,” Bacci said. The auctions are likely to be a big draw for IOCs, he added.
These predictions are likely to prove cor- rect, given that the upcoming bidding rounds will cover fields in the Pre-Salt region, the main driver of growth in Brazil’s oil and gas
production. Additionally, all three rounds will be conducted on virtually the same terms as the 2016 auctions, which gave IOCs their first opportunity to seek the right to operate Pre-Salt fields.
The 2016 bidding contest did not sideline Petrobras. Indeed, the company retained the right to pre-empt any investors that were seeking to secure stakes of 30% or more to assume the operatorship of new projects.
Presumably the NOC will have the same right of first refusal in the upcoming rounds. Even so, IOCs are likely to bid competitively – and not just for the chance to become operators of Pre-Salt fields, but also for the opportunity to seek 100% equity stakes in several of the sites slated for sale.
This sense of opportunity helped lead Royal Dutch Shell (UK-Netherlands), ExxonMo- bil (US) and BP (UK) to become operators in Brazil’s Pre-Salt region after the last rounds of bidding, and more IOCs may follow, according to GlobalData.
“Large resources, hydrocarbons quality, reduced lifting costs and the recent successful licensing rounds suggest a positive outlook,” Bacci commented.
He also stressed, though, that ANP’s deci- sion to hold three separate bidding rounds in quick succession might pose some challenges. “[There] is a potential risk in holding three rounds in a period of just two months, as poten- tial investors will have a limited time to assess the opportunities,” he said. ™
The Pre-Salt region is driving production growth in Brazil’s oil and gas sector. (Image: Royal Dutch Shell)
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w w w . N E W S B A S E . c o m Week 38 26•September•2019