Is it feasible to do three oil auctions in 2018?

April 3, 2018 Felipe Maciel

The government plans to hold an extraordinary meeting of the National Energy Policy Council (CNPE) in April to approve the 5th round of pre-salt areas, which will have the SM-645 and SM-534 exploratory blocks removed from the 15th round of the ANP, and the Saturn area, all in the Santos Basin. In May, a new CNPE meeting should be convened to decide on the auction of excess onerous assignment. The government’s goal is to hold both bids until September.

The 4th auction of the pre-salt will be added to the calendar, which will take place on June 7, and offer the areas of Itaibemzinho, Três Marias, Dois Irmãos and Uirapuru, in the Campos and Santos basins. The ANP wanted publish the announcement in the auction last week, but the decision to tender the Saturn area together with the two blocks removed from the 15th round created the need to make changes to the bidding, which should come out this week or next.

And can Brazil promote three auctions 2018?

Brazil is going through a clear change in the profile of its bidding rounds. The creation of the permanent supply of areas, where ANP studies to leave all the onshore blocks of the country, optimizes and gives agility to offshore biddings, which should be focused on majors and large independents.

Preparing rounds of tenders in general is not a complex task for the ANP. The agency has plenty of knowledge about the auctions and the technical and operational ability to do so. It is necessary to analyze the political deadlines and the calendar of auctions around the world to understand whether or not it is worth to do three auctions.

In a year of elections and with the national political scene very undefined, believing in the conduct of bids during the transition period of government is very complex. Therefore, the two auctions need to be made by September or run the risk of moving to the next year or no longer be held, depending on who wins at the polls.

To hold the auctions until September, the ANP requires that the CNPE approve the accomplishment of the competitions until the end of May. That is, is there time to carry out the auctions fulfilling the bureaucratic requirements provided by law.

And, will the oil companies have the demand for two more auctions?

The 15th round of bids shows that some oil companies have chosen not to enter auctions elsewhere in the world – such as Mexico and the US – to be in Brazil. Armando Cavanha wrote at E & P Brasil that ExxonMobil was betting in Brazil and it was not in the US auction.

Others, such as Shell – even bidding on other markets, such as Mexico – continue to invest in Brazil and have participated in all auctions since the resumption of bids. BP, Repsol and even Chevron – always very reluctant to bid in Brazil – are bidding here and showing interest in the pre-salt areas.

Not to mention Petrobras, which will have the right of first refusal in all these areas and can participate with at least 30% of all projects. The state-owned company has bet strongly in the re-composition of its exploratory portfolio and acquired pre-salt areas with the most varied partners.

Brazil’s oil auctions may be the main source of revenue for the Union in 2018. It is necessary to maintain the model and security so that companies continue to invest in the country