Oil Majors To Bid On Choice Stakes In Brazil’s Offshore
Executives from oil majors gathered in Rio de Janeiro on the 7th June to compete for stakes in Brazil’s pre-salt oil play, home to some of the world’s most alluring offshore geology, as rising oil prices boost appetite for expensive offshore projects.
A record 16 companies, including Chevron, BP and Royal Dutch Shell registered to bid for four blocks in the offshore Campos and Santos basins, part of the so-called fourth pre-salt auction.
In the pre-salt layer, billions of barrels of oil are trapped beneath a thick layer of salt under the ocean floor.
Brazil, South America’s top producer, has recently attracted record bids from the likes of Exxon Mobil, also registered to compete, as oil majors seek to replenish depleted reserves.
A rise in oil prices to around US$75 a barrel may entice even more interest, analysts say.
Decio Oddone, director of Brazilian oil regulator ANP, said he expected it to be the first pre-salt auction where all blocks are sold, meaning an injection of 3.2 billion reais (US$832 million) into Brazil’s cash-strapped government.
“Brazil has a history of respecting contracts and the assets are appealing,” Mr Oddone said, brushing off concerns about a possible impact on the auction from a fresh wave of government meddling in fuel prices at state-controlled oil company Petrobras.
A truckers’ strike over higher diesel prices paralyzed commerce in Brazil last month, prompting the government to announce measures to cut prices for the fuel. This fanned fears of more government interference at Petrobras and sent its chief executive officer packing.
Under current Brazilian rules, Petrobras will likely serve as operator and take at least a 30 percent stake in all pre-salt blocks it expresses an interest in prior to the bid round.
Petrobras has raised its hand for the Dois Irmãos field in the Campos Basin and the Três Marias and Uirapuru fields in the Santos basin.
Including the fourth field, Itaimbezinho, the areas up for auction make up more than 4,000 square kilometres and mandatory bonuses to the government range from 50 million reais (US$13 million) to 2.65 billion reais (US$696 million) per block.
Other potential bidders include Spain’s Repsol SA, France’s Total SA, and China’s CNOOC Ltd. They will compete based on how much oil after cost they pledge to the government. Minimums per block range from seven percent to 22 percent.
Source: Rigzone