May 29, 2020

Brazil only manages to award two of four blocks offered in mega auction

Brazil raised 70,000 million reais (about 17,500 million dollars) in the oil auction on Wednesday, in which it only managed to award two of four blocks on offer and both to Petrobras, which in one of them was associated with the Chinese corporations CNODC and CNOOC.

In the largest oil auction held in the history of Brazil, the South American giant did not obtain the collection of 106,500 million reais (about 26,625 million dollars) that the Government expected, since for two the areas (Atapú and Sepia) there were no bidders .

The big winner of the day was the Brazilian state-owned company Petrobras, which in consortium with the Chinese companies obtained the Búzios area, the most desired of the bid, as well as the Itapú block, in that case as the only bidder.

In the consortium that was presented by the Búzios area, Petrobras has a 90% stake, while the Chinese CNODC and the CNOOC each hold 5%.

The Brazilian-Chinese consortium was the only one that submitted offers for that block, for which it undertook to pay 68,194 million reais (about 17,134 million dollars) just for the license and to give the State a share in its profits of 23, 24%, which was the minimum required by the National Petroleum Agency (ANP, regulator).

Búzios, located in the Santos basin, is the second most productive area of ​​the Brazilian fields of the pre-salt, an exploitation horizon that Brazil discovered in very deep waters below a layer of salt two kilometers thick and that can locate the country as the world's fifth largest hydrocarbon exporter.

With 54 wells already drilled, it is the only one of the four blocks auctioned on Wednesday that is currently productive, and with a yield of 424,000 barrels a day of oil.

For the Itapú area, Petrobras was the only bidder and promised to pay 1,766 million reais (about 441.5 million dollars), only for the award of the license and to give the Brazilian State a share in its profits of 18, 15%, which was also the minimum required by the regulator.

Unlike Búzios, Itapú already has three wells drilled but is not in production.

Based on the rights of preference granted by law, Petrobras will be the operator of both fields, with which the state will be responsible for the conduct and execution of all activities carried out in those areas of the pre-salt.

Although 14 multinationals in the sector signed up for the contest, only seven ended up participating in the auction.

In addition to Petrobras, the American Exxon Mobil, the Norwegian Equinor, the Chinese corporations CNODC and CNOOC, the Portuguese Petrogral and the Colombian Ecopetrol participated, but only the Brazilian made offers

According to the ANP, the four areas offered in the auction can jointly produce 1.2 million barrels a day of oil and generate, in royalties alone, 52,500 million reais (about $ 13,125 million) annually as of 2024.

. (tagsToTranslate) Brazil (t) gets (t) award (t) offered (t) megasubasta

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