Page 7 - LatAmOil Week 42 2019

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Altogether, the blocks could fetch signing bonuses of at least BRL 7.85bn ($1.89bn).
Brazilian officials have indicated, though, that ANP may not be able to secure contracts for all ve sites next month. Waldery Rodriguez, the special secretary to the Economy Ministry, said last week that the government might be able to sign enough deals to collect $1.45bn in signing bonuses.
Roberto Castello Branco, the CEO of Brazil’s national oil company (NOC) Petrobras, said last week that his company had high hopes for the sixth pre-salt bidding round. e blocks that will be o ered to investors are set to play a crucial role in the NOC’s e orts to push oil production up, he said.
Transfer of rights
Meanwhile, ANP is also preparing for another licensing round – the transfer of rights/surplus production-sharing bidding round, which will be held on November 6.
In this round, the agency will auction off development rights to the Sepia, Itapu, Buzios and Atapu blocks. All four sites lie within the pre-salt zone and have already been proved to hold oil. (Sections of Buzios, for instance, are currently yielding around 425,000 bpd.)
Petrobras has been extracting crude in the area, but the Brazilian government has reserved acreage that may hold around 15bn barrels of oil for private investment. It hopes that the four blocks will be attractive enough to draw licens- ing fees of up to $25bn and signing bonuses of about $11.6bn.
Plans for the auction were finalised last month, when Brazil’s Senate approved amend- ments to an existing plan for the transfer of rights to benefit from the projects to Rio de Janeiro and the other coastal states that are nearest to the elds. Petrobras had originally been eligible to collect all of the proceeds, but it agreed to let the states take 3% of the pre-salt surplus reserves and 15% of the signing bonuses from the bidding round in exchange for $9bn in compensation.
e NOC is set to receive further compen- sation a er the signing of contracts. Bloomberg noted this week that the winners of the auction would have to negotiate with Petrobras about reimbursement for the funds it had already invested in the pre-salt zone. O cials famil- iar with government estimates told the news agency that these payments might raise the cost of developing these four blocks by as much as $25-45 bn. ™
Bolivian natural gas sector’s future looks uncertain following election
BOLIVIA
THE future of Bolivia’s natural gas industry is looking uncertain – and not just because of the turmoil and accusations of voter fraud surrounding the presidential elections held on October 20.
President Evo Morales, who appeared to be heading for a narrow victory as of press time, has been using gas and the revenues it gener- ates to help build popular support ever since 2006, when he forcibly nationalised the sector. But his strategy has been less e ective in recent years, as evidenced by the fact that oil and gas now account for just 20% of total state revenues, down from 35% ve years ago.
e decline stems partly from the drop in world oil prices, which helped pull Bolivia’s hydrocarbon revenues down from $5.5bn in 2014 to $2.3bn in 2018.
But it is also a consequence of the fact that Bolivia’s existing gas wells are maturing, and the national oil company (NOC) YPFB is not replacing production with new discoveries. Its e orts to team up with foreign investors have had limited results.
Earlier this year, for example, Spain’s Repsol nished drilling a $140mn wildcat well at the
Boyuy eld, but apparently to no avail. So far, it has not reported any commercially viable nds. Bolivia’s di culties also stem from the dis- covery of gas in both Brazil in Argentina. Both of these countries used to import Bolivian fuel, but now they are working to develop domestic reserves so that they can reduce their depend-
ence on foreign supplies.
Freddy Castrillo, the hydrocarbons secre-
tary of the Tarija department, which accounts for around 55% of Bolivia’s total gas production, acknowledged these points last week. “This government hasn’t made any new discoveries,” he told Bloomberg. “ e scenario for prices is completely unfavourable, production is down and our main clients – Brazil and Argentina – are becoming our main competitors.”
Ricardo Bedregal, the head of Latin Amer- ican upstream research at the IHS Markit con- sultancy, indicated that he had little hope for a change in the near future.
“ e main threat to Bolivia is Bolivia itself. There are no fiscal incentives to attract new investors to the game. ere’s nothing to change the declining trajectory,” he told Bloomberg last week. ™
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