Page 11 - LatAmOil Week 15 2021

LatAmOil BRAZIL LatAmOil

Additionally, the agreement calls for Petrobras to attract many bids.
to receive a larger amount of net and firm com- Under the terms of the TOR programme,
pensation – $3.253bn in the case of Atapu and Petrobras has already extracted some 550mn
$3.2bn in the case of Sépia. It also states that the boe from Atapu and 500mn boe from Sépia.
company may receive supplementary payments Both fields are located near Búzios, a large
between 2022 and 2032, provided that average deposit in the eastern portion of the Santos
annual Brent crude prices fall into the $40-70 Basin that is also part of the TOR programme. ™
range.
Petrobras did not say whether the govern-
ment expected to receive any offers for the
blocks. It did indicate, though, that it would be
expected to sign a co-participation agreement
with new investors in either field. “The co-par-
ticipation agreement will only be effective with
the signing of the production-sharing agree-
ment [PPSA] and the payment of compensa-
tion to Petrobras, when the contractors will have
access to their production share from the fields
of Sépia and Atapu,” it said in the statement.
Both Sépia and Atapu lie within the Transfer
of Rights (TOR) zone, where the NOC secured
permission directly from the government
to extract 5bn barrels of oil equivalent (boe)
from four blocks about a decade ago. Brazilian
authorities attempted to unload the right to
extract the remaining volumes from these sites
in an auction in late 2019, but they were not able The Atapu and Sépia fields are in the Transfer of Rights zone (Image: Petrobras)

ARGENTINA
Buenos Aires mulls oil price controls

ARGENTINA’S government is looking to estab- Neuquen basin, when global oil prices sink.
lish long-term price controls for the domestic oil These projects tend to have relatively high
market, according to Production Minister Mat- break-even costs, especially when developers
ias Kulfas. are using hydraulic fracturing (fracking) and
The administration of President Alberto other techniques to access unconventional oil
Fernandez has included provisions for setting a and gas reserves.
floor and ceiling for domestic oil prices in a new As such, price controls have the potential
piece of draft legislation, Kulfas told Bloomberg to keep domestic prices high enough to justify
in an interview last week. These provisions will continued investment in Vaca Muerta shale oil,
be part of a bill designed to attract more invest- even at times when global markets are taking
ment into the hydrocarbon sector, he explained. a bearish turn. But they could also undermine
According to the minister, the Fernandez efforts to make Argentina into an oil exporter,
administration sees price controls as a means since they do nothing to guard producers from
of protecting Argentina from fluctuations on the gaps that will arise between domestic and
global crude oil markets. With a price ceiling world crude prices.
in place, rising oil prices will not cause domes- As of press time, the presidential adminis-
tic petroleum product prices to surge, thereby tration was still working on the bill. Fernandez’s
imposing burdens on consumers, he explained. team aims to submit the draft legislation to the
By the same token, establishing a price floor National Congress later this year. ™
should make investors less inclined to leave the
country if world crude prices fall, he said.
“What we want structurally is a solution
that foresees the problems of volatility,” he told
Bloomberg. He did not reveal any details of the
government’s crude pricing plan.
In theory, the bill should help ensure that
international oil companies (IOCs) and other
investors do not pull out of projects in Vaca
Muerta, a vast shale formation within the Minister Matias Kulfas (Photo: Argentina.gob.ar)

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