Petrobras has drawn up a strategy for Brazil oil auctions

RIO DE JANEIRO (Reuters) – Petróelo Brasileiro SA has drawn up a strategy to participate in Brazil’s three upcoming oil auctions this year, as a declining debt burden has increased the state-controlled oil producer’s firepower, Chief Executive Officer Pedro Parente said on Wednesday.

Petrobras will participate in auctions in which the government will offer areas for oil and gas exploration this month and in October, company president Pedro Parente said in a message seen by Reuters.

“For our company, it is time to strategically act and rebuild our exploratory portfolio,” Parente wrote, which defined bids as “the beginning of a new moment in the oil and gas sector” in Brazil.

A first auction today will offer concession areas, while two bidding sessions on October 27 will involve production-sharing areas in the Brazilian pre-salt region.

All the rounds, promoted by the National Agency of Petroleum, Natural Gas and Biofuels (ANP), attracted interest from big global oil companies, among them the giants Exxon Mobil and Royal Dutch Shell, among others.

“Recomposing our exploration portfolio is one of the initiatives of our strategic planning and Petrobras will make offers for the fields that add value to our already existing set of assets, as we have already shown when exercising preemptive rights in the areas offered in the share auction” , said Parente.

At the end of May, Petrobras announced that it will exercise preemptive rights in only three of the eight prospects that will be offered in the two pre-salt auctions.

In the second round of the pre-salt, the company will target the area adjacent to the Sapinhoá field, one of the largest in Brazil already in production, while in the third the company will have preference in the exploratory prospects of Peroba and Alto de Cabo Frio Central.

Parente said that Petrobras still has many “financial challenges” and a high debt, but pointed out that the resources for the auctions are assured in its investment planning.

“We understand that the opportunity that opens with the resumption of auctions by the government is an important moment for our company,” he said.

According to the executive, Petrobras will seek areas that add value to the company, considering the assets already in its portfolio and the risks associated with each area.

“Our goal is to ensure that by looking at all the areas offered at these auctions, we have the best results for our portfolio and consistently move forward in rebuilding our company,” he said.

The government’s expectation is to raise at least 1 billion reais with the collection of grant bonuses in Wednesday’s auction of post-salt and terrestrial areas.

The two pre-salt auctions on October 27 may raise at least 7.75 billion reais if all areas offered are sold off by the minimum grant award.

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