Brazil experienced a “historic day in the oil and gas sector” with its 14th Round, as the joint venture of Petrobras and ExxonMobil signed the largest bonus of US$701 million (R$2.24 billion) for a block in the Campos basin.
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Oddone. Image from ANP Facebook. |
A total of 287 exploration blocks were auctioned across nine basins today (27 September) with an estimated total of 50 billion bbl in place, both offshore and onshore.
The round saw the largest total signing bonus in the country’s history, which came in at nearly $1.2 billion (R$3.8 billion), and resulted in the two largest offers per block: about $701 million (R$2.24 billion) and $376 million (R$1.2 billion).
Companies acquired 37 blocks at an area of 25,011sq km for exploration and production with a projected investment of $264.6 million (R$845 million). The offshore acreage included blocks inPelotas, Santos, Espírito Santo, Sergipe-Alagoas, and the Campos basins.
In the Campos basin, eight blocks were sold at a value of $1.1 billion (R$3.65 billion).
The largest signature bonus in Campos was R$ 2.24 billion, offered for block C-M-346 by the Petrobras-led JV (50%), with partner ExxonMobil Brasil (50%).
Other winners in the Campos basin were: Exxon as operator with 100% stake in each of Blocks C-M-37, and C-M-67; and Petrobras as operator with 50:50 partner Exxon for Blocks C-M-210; C-M-277, C-M-344, C-M-346, C-M-411, and C-M-413.
In the Espírito Santo basin, winners consisted of CNOOC with 100% of Block ES-M-592; Repsol with 100% of ES-M-667; Bertek Produtos, Serviços e Mineração with 100% ofES-T-345 and ES-T-476; Imetame Energia with 100% of Blocks ES-T-354, ES-T-373, ES-T-441, ES-T-487, and ES-T-477; and Vipetro Petróleo with 100% in ES-T-453.
In Sergipe-Alagoas, winners included: Exxon as operator with 50% of SEAL-M-501 and SEAL-M-503 with partners Queiroz Galvão (30%) and Murphy E&P (20%) on both blocks; Muncks & Reboques Brasil with 100% stake in SEAL-T-132; and Greenconsult Consultoria Empresarial with 100% stake in SEAL-T-430.
Karoon’s Brazil subsidiary Karoon Petroleo e Gas won the lone block that was bid on in the Santos basin, Block S-M-1537. The total signing bonus charged on the concession of these blocks was approximately $6.2 million (R$20 million). The minimum investment planned for the basin is nearly $2 million (R$6.19 million).
There were no offers for the Pelotas basin.
In total, 20 companies from eight countries participated in the bid. Seventeen of them acquired blocks, of which 10 are Brazilian and seven are from other countries. The signing of contracts is expected to occur until 31 January 2018.
The success of the auction reflects the regulatory changes made by the Brazilian government, which have made the business environment more attractive to companies of different sizes, Brazil’s National Petroleum Agency (ANP) said.
ANP said it continues its strategy to expand exploration areas in the country and attract companies of different profiles.
For the 14th Bidding Round, some rules of the Brazilian concession regime were simplified, including: the adoption of a single exploration phase and the possibility of extending it due to technical reasons; the removal of local content as a bidding criteria; distinct royalties for new frontier areas and mature basins of greater risks; and incentives to increase the participation of small and medium-sized companies.
During the opening of the public session, the ANP Director General, Décio Oddone, stated that the occasion is “a historic day to the oil and gas sector in Brazil.
“This bidding round marks a new beginning of investments, after the biggest crisis this sector had ever experienced in Brazil,”Oddone said. “These measures will bring hundreds of billions of reais in investments, that is, wealth to the Brazilian society.”
The third pre-salt round will be held on 27 October in Rio de Janeiro, consisting of four areas that are close to fields or prospects whose reservoirs extend beyond the granted area. The areas are related to the discoveries Cat of Mato and Carcará, and to the fields of Green Turtle and Sapinhoá.
The third round will offer four areas in the Campos and Santos basins, in the region of the pre-salt polygon, related to the prospects of Pau Brasil, Peroba, Alto de Cabo Frio-Oeste and Alto de Cabo Frio-Central.
Currently, the 10 most productive wells in Brazil are located in the pre-salt polygon, which already accounts for half of the Brazilian production, according to the ANP.
Brazil plans to hold nine auctions between now and 2019. Investments related to these auctions is estimated at US$80 billion, resulting in 300 marine wells, plus 10 billion bbl recoverable, around $100 billion in royalties, 17 new production units, plus 2 MMb/d, over the duration of the contracts.
Bidding round positive for Petrobras, ExxonMobil
The 14th round was good news for the Brazilian government from a fiscal perspective and a positive outcome for Petrobras as it establishes a strong partnership with ExxonMobil to develop its pre-salt acreage, said Horacio Cuenca, Research Director, Upstream Latin America at Wood Mackenzie.
The company had previously formed partnerships with world-class operators like Shell, Total and Statoil. These are likely to extend into the upcoming 2nd and 3rd pre-salt rounds and the surplus volumes transfer of rights round expected in 2018.
"For ExxonMobil, a lack of presence in Brazil's pre-salt has been arguably the biggest gap in its portfolio, especially now that Shell holds a dominant position in this prolific, relatively low-breakeven play,” Cuenca said. “ExxonMobil's wins this round and its expected participation in the upcoming 2nd and 3rd production sharing contract rounds in October will help plug that gap and provide the company with perhaps the strongest pipeline of future oil growth opportunities within its peer group."
"Additionally, establishing a material position in Brazil's pre-salt play through exploration success would mark another positive step in repositioning ExxonMobil's oil portfolio lower down the oil cost curve, complementing Permian tight oil and Guyana,” Cuenca said.
However, basins outside of Brazil’s pre-salt areas received very little interest, indicating Brazil faces challenges in attractive significant investment in these areas even after implementing substantial regulatory enhancements, Cuenca added.
Read more:
Brazil sees spike in pre-salt round interest
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