New round of pre-salt auction confirms recovery of the Brazilian oil industry

June 08, 2018

Despite the traditional volatility of the oil and gas sector, in addition to domestic market turbulence, the national oil industry has confirmed the recovery path ahead of the result of the pre-salt auction held last Thursday, in which three blocks were sold for R $ 3.15 billion to large companies.

“These auctions that are taking place demonstrate the investor’s appetite and confidence that the country may have a new cycle of growth,” Gilson Coelho, executive secretary of the Brazilian Association of Petroleum Services Companies (ABESPetro), told the portal Government of Brazil.

In his view, based on the definition of a calendar of oil and gas auctions after years without shows in the that Brazilian government managed to impose a positive agenda and provide conditions for investments to recur in this area. “Brazil oil industry has turn around. The lack of auctions was lethal, the industry needs predictability, “he said. “The sector has managed to grow in the last two years, what it did not grow in five years,” he said.

Regulatory changes

In the last two years, the changes implemented by the Government in the sector were decisive for resuming the exploration activity and creating an expectation of investments and growth.

A clear regulatory framework, rules of local content without interventionism, and also the release of Petrobras to participate in all exploration consortiums were decisive in injecting momentum into the market in this area, as Coelho pointed out. “This attractiveness comes on top of a crisis in which the country lives. Even so, the industry is creating the positive agenda “he said.

Previous rounds

The two rounds of the pre-salt occurred last year generated strong competition attracting foreign investment, and raised R $ 6.15 billion in investment bonds.

The 14th and 15th rounds of exploratory blocks, under concession, also had strong competition and resulted in a raising R $ 3.8 billion and R $ 8 billion, respectively.

With the new policy, it was possible to plan the next auctions until 2019, including another round of pre-salt areas. In all, more than $ 100 billion in royalties and $ 80 billion in investment are expected in the coming years. Only in 2018, the Brazilian Government estimates to raise R $ 18 billion with the oil and gas auctions.

Source: Portal Brasil | Nestor Rabello

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