As global oil firms make ever-bigger bets on Brazil's massive deepwater fields in its 'subsalt' area, a swarm of small and mid-sized companies has sprung up to specialize in lower-profile fields that still produce over a third of the country's crude.
The proliferation of niche players, ranging from private equity firms to domestic and international oil companies, is adding to the dynamism of an oil industry long ruled by state oil firm Petroleo Brasileiro SA, or Petrobras.
In recent years, Petrobras has shed billions of dollars of onshore and shallow-water fields, as well as some less prolific deepwater blocks, to pay down debts and focus on hugely promising subsalt areas, where billions of barrels of oil are trapped beneath a layer of salt under the sea floor.
Those asset sales, along with a steady calendar of small- and medium-ticket auctions for exploration areas, have fueled the growth of more nimble local players such as Enauta Participacoes SA.
It may be easy to lose sight of those minnows next week, when whales from Petrobras to Exxon Mobil Corp and Royal Dutch Shell Plc are expected to drop some $28 billion in signing bonuses for gigantic subsalt bidding rounds. However, executives and experts say the emerging bantamweights are a key gauge of the Brazilian industry's health.
"This is very positive, and competition is very good for the industry," said Nelson Queiroz Tanure, CEO of Rio de Janeiro-based independent Petro Rio SA, of the divestments by Petrobras and other oil majors focused on deepwater fields.
Common shares in Petro Rio are up 89% year to date. Much of that came in a two-month period after the company bought Chevron Corp's 52% stake in the offshore Frade field in January.
"We look upon Petrobras selling already producing assets very positively, and we also see other firms selling as a positive as well," Tanure said.
Asset sales accelerate
The government has made no secret of a desire to boost the number of operators in Brazil. Officials say more specialization will help productivity in geologies outside the core subsalt areas drawing most investments by Petrobras, still the country's biggest producer by far.
In a presentation at Rio de Janeiro's Offshore Technology Conference (OTC) on Wednesday, Marcelo Castilho, an official at oil regulator ANP, said Petrobras will divest more than 180 shallow water and onshore fields.
"What we've seen this year is an acceleration (in asset sales), and we imagine this will continue in the coming years," said Alexandre Calmon, an oil and gas specialist at law firm Tauil & Chequer, in another presentation.
New ANP rules also allow for forms of reserve-based lending, in which an asset's reserves are used as collateral on loans, which has lowered barriers to entry, oil executives say. In the coming weeks, the regulator is also expected to begin reducing certain royalty payments required of operators of mature fields, or fields at the later stages of their productive lives.
Among those that have scooped up Petrobras assets in recent months are private equity players such as Warburg Pincus-backed Trident Energy, foreign firms like Norway's BW Offshore Ltd and Australia's Karoon Energy Ltd, as well as domestic firms such as gas-focused Eneva SA, Petro Rio and onshore-focused PetroReconcavo.
Still, the process is not without its critics.
Oil workers' unions say Petrobras should reinvest in onshore and shallow-water assets rather than sell them off. They argue that new entrants will answer more to shareholders than the needs of local populations near the fields, many of which are located in poorer parts of the country.
Others say assets are getting expensive. Some buyers have struggled or failed altogether to finance bids for Petrobras assets with pricetags that many considered rich.
"I think Petrobras has done an excellent job at getting very good prices," said Petro Rio's Tanure. "On the other side of the coin, I think there is a certain irrationality in the way firms are going for these assets."
(Reporting by Gram Slattery and Marta Nogueira; editing by Brad Haynes and Richard Pullin