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Brazil sets licensing round record

South American nation collects over $2bn in signing bonuses from opening oil auction

Brazil successfully awarded 12 blocks in the 16th Bidding Round, the first of three major oil auctions to be held in the country before the end of November—combined the rounds promise to generate a minimum of R$117bn ($28.4bn) in signature bonuses for the government.

The prolific pre-salt region dominated the auction. In the Campos basin, a total of 10 blocks were awarded, out of a possible 13, to 11 international oil companies.

Chevron was the most successful bidder in the basin, winning a share of four blocks. The US major became operator of block C-M-845, with a 40pc stake, in consortium with Spain’s Repsol (40pc) and Germany’s Wintershall Dea (20pc). Other acreage for the firm included a 35pc stake in block C-M-659, in consortium with operator Shell (40pc) and Qatar Petroleum (25pc), a 40pc share in block C-M-825, in consortium with operator Repsol (60pc), and a 35pc stake in block C-M-713, in consortium with operator Shell (40pc) and QP (25pc).

Repsol, Malaysia’s Petronas and QP all made three winning bids in the Campos basin. The Spanish company became the operator and owner of block C-M-795, with a 100pc holding, as well as blocks C-M-825 and C-M-845. Petronas became operator and 100pc holder of blocks C-M-661 and C-M-715. The Malaysian company also joined French operator Total (40pc) and QP (40pc) in block C-M-541, with a 20pc stake.

Three companies were awarded the remaining two blocks in the Campos Basin. ExxonMobil became operator and 100pc holder of C-M-479, while block C-M-477 was won by a coalition of Brazilian operator Petrobras (70pc) and BP (30pc).

In the Santos basin, also in the pre-salt, two blocks were auctioned of the 11 available. Block S-M-766 was won by a consortium of operator Chevron (40pc), Repsol (40pc) and Wintershall Dea (20pc). The remaining block S-M-1500 was acquired by operator BP with a 100pc holding. 

“Total is pleased to expand its footprint in the Campos Basin with this new operated exploration block" Pouyanne, Total

Companies registered for the auction declined to apply for any blocks in the Camamu, Jacuipe or Pernambuco-Paraiba basins, reinforcing the general trend that global appetite for deepwater acreage is rebounding, but only in basins that are seen as highly prospective and offering the potential for materially -sized and low-cost barrel discoveries.  

“I had high expectations for the auction and it actually went beyond my expectations,” says Bento Albuquerque, Brazil’s minister of mines and energy. “This auction broke the record in signature bonuses at R$8.9bn ($2.17bn). What it shows is that the sector is moving in the right direction and opens new perspectives for auctions that are yet to happen—the Transfer of Rights on 6 November and the 6th Round of Production Sharing, also in November.”  

“We made the right decision”, says Decio Oddone, director-general of the Brazilian National Agency for Petroleum, Natural Gas and Biofuels (ANP), the organisation conducting the auction, having previously suggested postponing the auction. “Look at the diversity of companies we have. It guarantees we will not lack resources and equipment to make this production possible.”

“Total is pleased to expand its footprint in the Campos Basin with this new operated exploration block, alongside two strategic partners. It is another demonstration of our ability to seize high quality exploration acreage in a key growth area,” says Total CEO Patrick Pouyanne. The firm currently has 23 blocks in Brazil, with nine operated. Last year, Total reported total Brazilian production of 19,000bl/d.

 “The blocks are located in the immediate vicinity of three licenses, where we already have exploration activities,” says Valarie Bosse, managing director of Wintershall Dea in Brazil.  “They are a strong complement to our exploration portfolio, giving us further access to a maturing and emerging basin. We now look forward to start the exploration work together with our partners.”

Awarded blocks from the 16th Bidding Round Source: Petroleum Economist
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