National Agency of Petroleum, Natural Gas and Biofuels (ANP)

Brazil Government announces 13th petroleum auction Peter Howard Wertheim Dayse Abrantes-Staff writers

Brazil Mines and Energy Minister Eduardo Braga announced that Brazil will seek to raise as much as USD850 million with its 13th-round auction of oil and natural gas exploration rights in October.

The auction will be under the concession regime, which is much more attractive to investors than the production sharing regime used in pre-salt where Petrobras is always operator by law and has a mandatory 30% stake of all blocks that are being explored, said government sources told the local press.

Details of the auction will be explained to investors at the Offshore Technology Conference (OTC) in Houston.

Brazil's government held frequent oil auctions between 1999 and 2008, under a concession regime, but then suspended the awarding of new contracts while studying regulatory changes.

In 2013, two bidding rounds were held for shallow-water and onshore fields under the concession regime, which also will be used for the late 2015 auction.

Also in 2013, a first auction was held under a new production-sharing model that exclusively applies to pre-salt reserves. That new regulatory framework was approved in 2010 and makes Petrobras the sole operator of each production-sharing agreement and gives the company a minimum 30 percent stake in all pre-salt projects

Originally, the 13th round was set for the first half of this year. The date change is due, in part, to a sharp drop in global crude prices and the ongoing investigation of corruption at Brazilian state-controlled oil giant Petrobras, a source at the National Agency of Petroleum, Natural Gas and Biofuels (ANP), the national regulator that handles the auctions, told Scandinavian Oil-Gas magazine.

Braga said that projections for the bidding round are based on a price of $65 for crude per barrel of oil.

Between 270 and 290 blocks, none in the oil-rich subsalt fields, could be included in the bidding round. The government had planned to hold the auction in early May, but pushed the date forward at the recommendation of the ANP.

Money from the sale of new exploration rights could help President Dilma Rousseff's government meet its budget target for 2015, a key step to restore credibility with financial markets. The plan should also bolster Brazil's battered oil industry.

The government is considering delaying the auction of new exploration rights for the pre-salt region until 2017, instead of 2016 as previously announced. A delay could help Petrobras to buy time to recover from the impact of the scandal, which curtailed its access to financing, say experts.

National Agency of Petroleum, Natural Gas and Biofuels (ANP) The ANP is analyzing areas in three sectors distributed in ten sedimentary basins: Amazonas, Parnaiba, Potiguar (onshore), Recôncavo, Sergipe-Alagoas (offshore), Campos basin, Espírito Santo (offshore) and Pelotas. (See map)

Petrobras has said its production from the Santos and Campos basin pre-salt clusters reached record levels in February.

On February 26th, records were broken for Petrobras’ own output, which rose to 555,000 barrels per day (bpd), and for output from concessions operated for other companies (including operations run for partner companies), which reached 737,000 bpd.

Petrobras’ total oil and natural gas production in February 2015 was 2.801 million barrels of oil equivalent per day (boed), down 1.5% on the January figure (2.845 million boed). This February total includes both oil and natural gas, with domestic production at 2.612 million boed and foreign output at 189,000 boed.

Peter Howard Wertheim and Dayse Abrantes can be reached at: peterhw@frionline.com.br

Tags: Brazil Mines and Energy Ministery