A consortium formed by Brazil’s state controlled oil giant, Petrobras and Exxon Mobil Corporation won two blocks in Brazil’s Campos basin at an oil auction on Wednesday 27 September 2017 with bids totaling USD1.08 billion, oil regulator National Petroleum, gas and biofuels Agency (ANP) says.

The 14th Bidding Round of blocks for exploration and production of oil and natural gas, held yesterday 09/27 by the National Agency of Petroleum, Natural Gas and Biofuels (ANP), marked the reestablishment of the sector in Brazil, with the largest total signature bonus in history – over BRL 3.8 billion – and the two biggest offers for blocks – around BRL 2.24 billion and BRL 1.2 billion.

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.

The biddings rounds from 2017 to 2019 are expected to generate more than USD 80 billion in new investments throughout the contracts, more than USD100 billion in royalties and thousands of jobs.

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 reminded that, in addition to the 14th Bidding Round, two auctions for the pre-salt areas will be held this year, another six bidding rounds until 2019 and a permanent offer of areas will begin. “These measures will bring hundreds of billions of reais in investments, that is, wealth to the Brazilian society.”

In the bidding round, 37 blocks were acquired for exploration and production of oil and gas. The projection for investments of the Minimum Exploratory Program (series of activities to be carried out by the companies in the first phase of the contract) is BRL 845 million.

In total, 20 companies from eight countries participated in the bid. Seventeen of them acquired blocks, of which ten are Brazilian and seven are from other countries. The signing of contracts is expected to occur until January 31, 2018.

The total acquired area was 25,011 km². The blocks acquired are distributed in 16 sectors of eight sedimentary basins: Parnaíba, Potiguar, Santos, Recôncavo, Paraná, Espírito Santo, Sergipe-Alagoas and Campos.

The largest signature bonus was BRL 2.24 billion, offered for block C-M-346, of the Campos basin, by the consortium formed by Petrobras (50% – operator) and ExxonMobil Brasil (50%).

ANP 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, such as: 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.

In addition to the 14th Bidding Round, which covers the post-salt area, ANP will hold, on October 27, the 2nd and 3rd Pre-salt Rounds. Currently, the ten most productive wells in Brazil are located in the pre-salt polygon, which already accounts for half of the Brazilian production.

The 2nd Pre-salt Round will offer four areas with unitisable deposits (adjacent to fields or prospects whose reservoirs extend beyond the granted area). These areas are related to the discoveries named Gato do Mato and Carcará, and to the fields of Tartaruga Verde and Sapinhoá.

The 3rd Pre-salt Round will offer four areas located in the basins of Campos and Santos, in the pre-salt polygon, related to the prospects of Pau Brasil, Peroba, Alto de Cabo Frio-Oeste and Alto de Cabo Frio-Central.

The Brazilian government established a multi-year bidding rounds calendar. In 2018 and 2019, three bidding rounds will be held each year: one for areas with mature accumulations, one for the pre-salt area and one for exploration blocks.

Peter Howard Wertheim and Dayse Abrantes are experienced oil and gas journalists based in Rio de Janeiro, Brazil who cover the energy sector in Latin America. They can be reached at hwpeter15@gmail.com   

Tags: Exxon Mobil Corporation, Petrobras