Page 9 - LatAmOil Week 09 2020

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Brazil unlikely to sell remainder of “transfer-of-rights” zone before 2021
THE Brazilian government has said it is unlikely to unload the remainder of its production rights to the Cessão Onerosa (Transfer of Rights, or TOR) oil-bearing zone for at least one more year. Remaining areas of the prolific, oil-pro- ducing offshore zone will not be auctioned off until 2021, according to Waldery Rodrigues, the sub-secretary of the Economy Ministry.
The TOR area is located about 175 km south of Rio de Janeiro in the Santos offshore basin, which encompasses Brazil’s prolific pre-salt exploration and production region.
It is known as the “transfer of rights” zone because it was sold to Petrobras a decade ago without an auction. This transaction gave the NOC the right to develop 5bn barrels of oil equivalent (boe) in the TOR zone, which con- sists of four fields known as Itapu, Sepia, Buzios and Atapu.
Since the fields were purchased by Petrobras in 2010, there has been a decline in the value of these rights. Last November, the government auctioned production rights to two of the area’s subdivisions, but two others failed to attract a bidder. At the time, the only companies to sub- mit bids were Petrobras and two state-owned Chinese firms – China National Offshore Oil Corp. (CNOOC) and a subsidiary of China National Petroleum Corp. (CNPC). They made the only offers, even though more than a dozen major oil firms had sought permission to take part in the auctions.
The bidding round had been designed to draw more foreign investment to Brazil’s oil and gas sector. But several companies, including but not limited to France’s major Total, opted not
to proceed, saying they had decided not to bid or had concluded that the sale prices were too expensive.
Subsequently, Brazil’s former oil and gas secretary Marcio Felix said the government might need to reduce the signing bonuses for its fields. Brazil has been widely criticised for its high signing bonuses and complicated produc- tion-sharing deals, with analysts arguing that such provisions can deter foreign players from participating.
If all of the designated TOR blocks had been sold at last November’s auction, the winners would have needed to pay the government combined signing bonuses of nearly $26.6bn, according to recent research by the consultancy Oxford Energy.™
Petrobras begins sale process for gas unit, two oilfields
BRAZIL’S national oil company (NOC) Petro- bras has kicked off the sale process for its 51% holding in the gas unit Gaspetro as well as for its stakes in the Merluza and Lagosta oilfields.
The heavily indebted state-controlled firm released teasers for the sales last week, within the framework of its ongoing divestment pro- gramme. In one statement dated February 27, it
said that companies interested in acquiring the Merluza and Lagosta fields would have to regis- ter their interest formally with Bank of Amer- ica, its financial advisor for the transaction, by March 13. In a separate statement released the same day, it instructed potential buyers of the Gaspetro stake to notify Goldman Sachs by March 20.
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The transfer-of-rights zone includes four oilfields (Image: Petrobras)
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