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Pre-salt auctions should represent reinforcement of R $ 24 billion in the government’s coffers by 2019

 

Expectations are that investments in the fields will be around R $ 250 billion

BY BRUNO ROSA/Globo

03/04/2017 4:30 / UPDATED 03/03/2017 8:10

RIO – The world’s leading oil companies have started a marathon of meetings at Petrobras with an eye on the next four pre-salt auctions that the Brazilian government intends to do until 2019. It is that everyone wants to join Petrobras and form consortiums to explore a areas of greatest potential in the world.  The expectation is great on the auctions and it is expected to raise up to R $ 24 billion by 2019, of which about R $ 8.5 billion this year alone.

Based on government planning, auctions in the pre-salt can generate investments of about R $ 250 billion with the development activities of the areas, concentrated in the Santos Basin and, to a lesser extent, the Campos Basin. According to experts, there are a dozen large companies interested in the areas, which have already hired law firms. The creation of an auction calendar, an old industry demand, also reflects, say experts, the need for government tax revenue collection.

Oil companies’ appetite rose after changes in the sharing regime, which freed Petrobras from operating the pre-salt fields and having a mandatory 30% share in all areas. Another factor is the flexibilization of local content rules, which reduced the contracting obligations of Brazilian suppliers by 50%. In an interview with GLOBO, the Minister of Mines and Energy, Fernando Coelho Filho, pointed out that the changes will allow greater competitiveness in the country:

– With these changes being made, whether the end of Petrobras as sole operator to changes in local content rules, Brazil becomes very competitive. We need to stimulate the sector, otherwise, everyone will only do well if Petrobras is well. More activity generates more royalties for the states and more investments. This year, we expect to raise up to R $ 8.5 billion with the auctions.

The second pre salt round is scheduled for June and will have four unitized areas (whose reserve exceeds the limit of fields already awarded in previous auctions). The third occurs in November and will have new areas. The first round was in 2013, when Libra, in the Santos Basin, was sold for R $ 15 billion by Petrobras, Total, Shell and the Chinese SCNOOC and CNPC.

– All are watching the pre-salt, especially the American companies, that have stayed away from Brazil in recent years. There are still companies from Europe, Asia and South America. The idea is for Petrobras to build some consortiums for the main fields. They are eager to secure new reserves. With the technological development costing exploration and production, the oil scenario reaching US $ 60 per barrel is very interesting. With that, the rounds here will be attractive – comments a source who asked not to identify.

AUCTION WILL HAVE AREA NEAR LULA AND LIBRA

According to one oil company, the objective is to operate the pre-salt and not just be a financial investor. On the other hand, Petrobras itself has made clear in meetings that seek suppliers and partners that have solutions to lower the cost of extraction, recalls another source. The company’s goal is to be profitable even if the price of oil reaches $ 35 a barrel. Today, it can even get the value to reach $ 40. The price of the barrel closed Friday just over $ 52.

– The objective of Petrobras is to seek solutions to reduce the cost in the long term and, with this, to obtain better financial performance – emphasizes the source.

According to the president of a company, the greater interest is in the surroundings of the Lula fields – now the main producing area of the pre-salt and of the country – and Libra, as well as other areas in the region called Alto de Cabo Frio. There are also fields in the Santos Basin (Búzios, Sepia, Jupiter, Pau-Brasil, Peroba and Saturn) and Campos (Pirambu, Albacora, Baleia Azul). The Minister of Mines and Energy does not mention names, but emphasizes that the amount of areas is large.

“There’s a lot of pre-salt area.” There are areas close to these (Lula and Libra). It is these areas that arouse demand. But this will only be defined on April 11 by CNPE (National Council of Energy Policy). The rules will still be worked out – says the minister.

Although the resumption of the auctions is important, Alfredo Renault, a professor at PUC-RJ, says that there is concern of the government with the collection. For him, a balance must be sought:

– It is important that the placement of areas in the auction is not subordinated to the logic of collection for the fiscal need. Planning has to be based on the growth of the sector and investments not on tax collection possibilities.

Renato Kloss, a partner at Siqueira Castro Advogados, also evaluates that auctions are a way to increase revenue and generate more investments.

– There is a concern with tax collection, because these auctions generate resources for the government. but that is not the main driving force. These investments need to be unlocked.

But auctions bring challenges. Lívia Amorim, a researcher at the Center for Studies in Regulation and Infrastructure of the Getulio Vargas Foundation (FGV / CERI), emphasizes that the way local content will be defined in auctions brings doubts to companies. The government changed the policy in February, halving contracting obligations in Brazil, which now have a global index rather than different rates for equipment and parts.

– Despite the change of government, companies are apprehensive. It is also not known what will be the minimum percentage of profit in oil for Union required in public bidding (the Libra was 41.65%).

PETROBRAS HAS 11 RIGS IN PRE-SALT

The investment potential is great, say experts. Only the Lula field already accounts for 57% of the pre-salt production and has six platforms, number that will increase to eight until the end of the year. Petrobras has 122 platforms in Brazil, adding all fields (post and pre-salt). Of this total, 11 are in the pre-salt.

José Ricardo Roriz, vice president of the Federation of Industries of the State of São Paulo, recalls that a solution must be found for fines involving local content in processes under the scope of the National Petroleum Agency (ANP). He cites the case of Libra, whose fine may exceed $ 630 million, since the platform was made abroad.

– For the new auctions, it is necessary to resolve the fines of local content in the ANP and try to produce the maximum in Brazil, even with the reduction of the local content. Brazilian industry has the capacity to compete – says Roriz.

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