Page 5 - LatAmOil Week 31

LatAmOil COMMENTARY LatAmOil
 e 16th round of exploration contracts will then move forward on October 10, followed by the sixth round of production-sharing accords on November 7.
Kury expressed excitement about the pros- pect of seeing the national oil company (NOC) Petrobras sign a large number of new contracts withforeigninvestors. eauctionswillpresent Brazil with the challenge of “[having] this plu- rality of actors and di erent environments,” he commented.
He also described the upcoming licensing rounds as “an incredible moment.” Brazil’s oil and gas sector is likely to undergo profound changes over the next decade and has an unpar- alleled opportunity to make new advances, he commented.
Reservations for BP
Despite the ANP chief ’s optimism and enthusi- asm, the path to success may be a little bumpy.
True, the licensing rounds have generated considerable interest. As noted above, some 47 companies have already registered to participate in the transfer of rights surplus auctions.
So far, though, Brazil’s government has not identi ed these potential investors. It has also not commented on reports that at least one major oil company may decline to participate in the bidding because of concerns about costs and economic viability.
Bob Dudley, the CEO of BP, said last week that his company had not yet taken a decision on this front. He explained during a telephone con- ference with analysts that BP had some particu- lar concerns about the transfer of rights surplus programme, saying he believed that participa- tion might turn into a “very expensive” a air.
At present, Dudley said, the super-major simply does not have enough information to reach any conclusions. “ e terms are not all out there[but]theylookveryexpensive,”hestated.
As a result, he said, BP is treading carefully.
“We’re just going to remain very disciplined within our capital framework,” he declared. “We haven’t made any decision yet.”
He did note that BP was currently involved in negotiations with Petrobras but had not committed to any particular course of action. “[We’re] going to be really, really careful before weleapintothat,”hesaid.
Too close together
There is also a chance that the next bidding rounds could be held up by political quarrels.
Kury noted last week that Brazil’s Federal Court of Accounts, known locally as TCU, had expressed some reservations about the govern- ment’s schedule for the auctions.
In a recent report, the court suggested that the bidding contests might have to be delayed or rescheduled because the three upcoming rounds – the transfer of rights surplus initia- tive, the 16th round of exploration licences and the sixth round of pre-salt production-sharing licences—were set to take place on dates that were too close together.
e ANP head dismissed the concerns raised by the report, saying that his agency would not reschedule the auctions or recommend that the National Energy Policy Council (CNPE) con- sider other dates. He also described TCU’s role in the process as mostly advisory.
Nevertheless, the court’s position could indi- cate that there is some opposition to Brazilian President Jair Bolsonaro’s e orts to reform the oil and gas industry within the government bureaucracies. If so, ANP o cials ought to start thinking of ways to counter TCU’s arguments. ey should also compensate for the public rela- tions impact of BP’s concerns about costs with improved e orts to attract more major compa- nies to the auctions.
A er all, the ANP chief ’s ambitions may not matter much if the number of investors taking part in the new licensing rounds is too small.™
The AN “
ambitions may not matter much if the number of investors taking part in the new licensing rounds is too small
MEXICO
Mexico may use money from oil fund to cover budget shortfalls
P chief’s
MEXICO is mulling a proposal to use more than 40% of the money in its sovereign wealth fund to compensate for lower budget revenues this year.
Alejandro Gaytan, the Mexican Finance Ministry’s chief economist, told reporters last week that the government might withdraw as much as 121bn pesos ($6.3bn) from the fund, which currently contains 296bn pesos ($15bn). Even though the fund’s reserves have declined this year because of low crude oil prices, the gov- ernment needs to nd a way to cover gaps in the
budget, he explained.
Gaytan went on to say that Mexico City
might withdraw a smaller amount from the oil fund. e nal gure will depend on the state of budget revenues towards the end of 2019, he explained, noting that the shortfall had amounted to 68bn pesos ($3.5bn) as of the end of the second quarter.
Despite this gap, he said the government was optimistic about registering a budget revenue surplus equivalent to 1% of GDP this year.
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Week 31 07•August•2019 w w w . N E W S B A S E . c o m
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