Big guns pay big money in ‘historic’ offshore bidding round in Brazil

Brazil on Thursday held a bidding round where it awarded 22 offshore blocks to oil companies for a total signature bonus of more than 8 billion Brazilian reals – or 2.4 billion in U.S. dollars. 

According to the country’s oil and gas regulator ANP, the signing bonus is “the largest total in the history of this kind of bidding rounds in Brazil.” One of the blocks attracted a bid of no less than $853 million.

ANP says the auction will generate investments of, at least, R$ 1.2 billion in the first phase of the concession contracts alone (exploration phase).

“The auction exceeded all expectations. We had a diversity of operators, geographic diversity and remarkable bonuses”, said the director-general of ANP, Décio Oddone.

The companies who’ve won acreage in the round include the likes of ExxonMobil, Shell, Chevron, Petrobras, Wintershall, BP, Repsol, Statoil, Murphy, Queiroz Galvão, and QPI.

ExxonMobil took home eight blocks, four in the Campos Basin, two in the Santos Basin, and two in the Sergipe-Alagoas Basin, expanding its total position in the country to more than two million net acres, making it one of the largest acreage holders among international companies in Brazil. Exxon has worked in Brazil for more than a 100 years.

‘Resurgence of Campos Basin’

Commenting on some of the basins offered for bidding, ANP’s Oddone said: “We had the strengthening of the Sergipe-Alagoas basin and the resumption of the Potiguar basin as an attraction pole for operators. But the main news is the resurgence of the Campos basin, which has experienced a period of disruption in the offering of areas. The importance of the basin was reestablished in the 14th Bidding Round, with high bonuses, and now we have the confirmation, with all its blocks acquired. It shows this basin’s high potential.”

In total, 13 companies, from 11 countries took part in bidding for the offshore acreage put up on offer. Of these, 12 acquired blocks, 2 being Brazilian and ten were from abroad. The signing of contracts is expected to take place by November 30, 2018.

The round also had the biggest bonus offered for one block – the SC-AP5, on Campos Basin, with R$ 2.82 billion ($853 million) offered. This block was awarded to ExxonMobil as operator, with Petrobras and QPI as partners.

The total area acquired was of 16,400 km². There were no offers for the onshore blocks.

The blocks offered in the 15^th Round were selected in high potential and new frontier basins, aiming to increase Brazilian reserves and production of oil and gas, expand knowledge of the sedimentary basins, decentralize the exploration investment, develop the national oil industry and secure domestic and foreign companies in the Country, ANP said.

The 4^th Production-sharing Round is planned for June 7. It will offer areas located in the Pre-salt areas.

The calendar of rounds also includes two auctions for 2019: the 5^th Production-sharing Round, with areas in the Pre-salt Polygon, and the 16^th Bidding Round of Blocks, under the concession regime.