Page 4 - LatAmOil Week 44 2019

LatAmOil COMMENTARY LatAmOil
The transfer of rights bidding round covered four offshore fields (Image: Petrobras)
Brazil suffers disappointment
in transfer of rights licensing round
ANP sells just two of the four blocks offered to investors, with the only bids coming in from Petrobras and two state-controlled Chinese companies
WHAT:
Most of the IOCs eligible to bid in the auctions declined to participate.
WHY:
The Brazilian government had hoped the auctions would generate more money and bolster inter- est in the pre-salt zone.
WHAT NEXT:
Concerns about cost appear to be a deterrent to investment, despite the pre-salt region’s promise.
BRAZIL’S National Agency of Petroleum, Nat- ural Gas and Biofuels (ANP) had high hopes for the transfer of rights/surplus production-shar- ing licensing round, which took place on November 6.
It anticipated that international oil com- panies (IOCs) would jump at the opportunity to bid for the right to develop four sections of the prolific pre-salt region. This section of Bra- zil’s offshore zone is already known to contain around 15bn barrels of oil, equivalent to about twice as much as Norway’s proven reserve port- folio. The sale represented the largest offering of confirmed oil reserves since 2009, when Iraq opened up to foreign investment.
This optimism did not appear to be mis- placed. More than a dozen IOCs had applied for – and secured – the right to bid in the auc- tions, which covered the Sepia, Itapu, Buz- ios and Atapu blocks. They all did so with the
knowledge that the winners of the bidding con- tests would be obligated to pay relatively large sums in signing bonuses.
Investors’ reluctance
In the end, though, the only entities that sub- mitted bids were Brazil’s national oil com- pany (NOC) Petrobras and two state-owned Chinese firms, China National Offshore Oil Corp (CNOOC) and China National Oil and Gas Exploration and Development Corp. (CNOGEDC) , a subsidiary of China National Petroleum Corp. (CNPC).
Petrobras made an offer for Itapu, the small-
est of the four blocks on offer, on its own. It also teamed up with CNOOC and CNOGEDC to
bid for Buzios, the largest of the four. (The NOC
will play the leading role at Buzios, as it is taking
a 90% stake in the block, leaving its two Chinese partners with 5% each.) 
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w w w . N E W S B A S E . c o m Week 44 07•November•2019