With record registration, ANP auction could generate R $ 3.2 billion

June 5, 2018

The 4th Round of the pre-salt this Thursday could guarantee a bonus of R $ 3.2 billion to the Union. In all, 16 companies will compete for the four exploration blocks, located in the Santos and Campos basins, a record number of registrations for a bidding round under the sharing regime.

According to specialists consulted by Valor, the expectation is that uncertainties, recently raised concerns about the practice of market prices for fuels which culminated in the resignation of Petrobras president Pedro Parente and the unfolding of the truck drivers’ strike, should generate little or almost no negative impact on the attractiveness of the auction.

“The discussion of the fuel crisis does not talk about the exploration and production of petroleum.” They are different markets, the assets that Brazil has are very attractive, the evaluation of opportunity versus Brazil risk, in principle, has not changed, in the IBP analysis ” , explains the Executive Secretary of Exploration and Production of the Brazilian Institute of Petroleum, Natural Gas and Biofuels (IBP), Antonio Guimarães. “We hope, as it was for the previous auctions, that it’s a very attractive auction.”

The success of the most recent auctions encourages investors and the government, which has raised R $ 18.1 billion with rounds since 2017. For KPMG oil and gas partner Anderson Dutra, there is expected to be fierce competition for assets this week. According to him, the high dollar and the price of the barrel tend to weigh favorably in the decision of investments of the oil companies in the auction.

“Brent and the dollar on the rise tend to increase the companies’ ability to make acquisitions, and we will have a record number of subscribers in this round,” said Dutra.

De Luca Energy Consulting consultant, João Carlos de Luca, highlights the geological quality of the pre-salt assets put up for auction and sees a “good chance” that all four areas will be acquired. According to him, oil companies may feel encouraged to step up their bets in this year’s rounds, the last before the change of government.

“We expect the auction schedule to be respected, but companies will think about securing what they have available now. The oil companies are already working on this scenario [of political uncertainties in an election year], they will not pass up the opportunity,” he says.

The translation of investment optimism already begins to appear in statistics such as GlobalData, which provides for the entry of 27 new floating platforms (FPSOs) in Brazil until 2025, far ahead of Angola, second place (with 7 new units) . “The country will consolidate itself as the main offshore market in the world”, commemorates the director general of the National Agency of Petroleum, Natural Gas and Biofuels (ANP), Décio Oddone. “I believe there will be disputes [in Thursday’s auction] and that, for the first time, we will have offers for all areas.”

Former petroleum consultant John Forman explains that participating in the pre-salt auctions, oil companies are interested in accessing new oil reserves, not necessarily in the Brazilian fuel market. “They are [offered in the auction] medium and long-term projects. The focus is [oil] exploration and the areas are great,” he says.

Last week, the oil and gas secretary of the Ministry of Mines and Energy, João Vicente Vieira, had considered that the oil companies are looking for the long term and that the government hopes to negotiate all four areas offered. He acknowledges, however, that the changes proposed in Petrobras ‘pricing policy, while necessary to demobilize the truck drivers’ strike, gave a “bad signal” that is “not ideal” for investors – who can interpret government performance as interference in the refining industry.

Among the 16 companies registered for the 4th Round, according to Anderson Dutra of KPMG, one of the curiosities is about the participation of Petronas, Malaysia. The company, along with the German DEA Deutsche Erdoel AG, seeks in the 4th Round an opportunity to enter the Brazilian market. It is not a coincidence that the two oil companies are approaching Brazil.

Petronas, one of the largest oil companies in the world, has been mapping business opportunities since last year’s auctions. In 2013, the company reached an agreement with OGX to buy 40% of Tubarão Martelo (Campos Basin) field, but withdrew after the former oil company of Eike Batista went into judicial recovery. DEA, controlled by the investment fund Letter One Energy, closed, in 2017, a 50% purchase option agreement for Echidna and Kangaroo, Karoon’s projects in the Santos post-salt, but also did not advance in the negotiation.

One of the favorites, besides Petrobras, is ExxonMobil, the main protagonist of the last auctions, and BP – which also intensified its presence in the country in the last two rounds, with acquisitions of assets with potential for the pre- salt.

Dutra also notes that China’s CNOOC and CNODC were out of the 15th Round of concessions in March and may come back with force. “In addition, Shell is a company that always looks at pre-salt and deep water with interest and ExxonMobil has shown that it has come to stay in the country,” says the consultant.

Asked about the interest in participating in this week’s auction, Shell notes that it has been able to participate in all bidding rounds since the opening of the Brazilian market, and notes that “it is continually evaluating investment opportunities that are compatible with your business goals “.

As usual in this industry companies do not comment on whether or not they will participate in the auction. Petrobras has already declared the preemptive rights for the operation of three of the four assets offered: Uirapuru, Três Marias and Dois Irmãos, totaling a subscription bonus payment of R $ 945 million. The activity be focused in Itaimbezinho.

Source: Valor Econômico | André Ramalho, Cláudia Schüffner and Rodrigo Polito

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