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PRE-SALT AUCTION ATTRACTS INVESTORS, BUT POLITICAL UNCERTAINTY WEIGHS

 

With the postponement of the mega-auction of surpluses of the onerous assignment, to 2019, the 5th Round of the pre-salt gains even more importance within the strategy of the oil companies. Depending on the outcome of the presidential election, industry experts estimate, next week’s bid could be the last opportunity to acquire blocks in the pre-salt polygon in the coming years.

 

Two weeks into the first round of elections and on the eve of the auction, top executives of the world’s top oil companies are meeting next week in Brazil to participate in Rio Oil & Gas, the largest trade fair and congress in Latin America. Leaders of the big multinationals will run through the aisles of the event with an eye on new business and another on the political debate.

 

During Michel Temer’s two-year rule, a series of regulatory changes – such as easing local content policy and ending Petrobras’ sole pre-salt operator – helped create a more favorable business climate for oil companies. So much so that since 2017, they have already disbursed R $ 21 billion in the auctions, for acquisition of assets. The concern now is if these regulatory changes are undone.

 

Presidential candidates are divided over the future of the pre-salt auctions and a host of other topics of interest to oil companies, such as local content and divestments of Petrobras.

 

The president of Queiroz Galvão Exploration and Production (QGEP), Lincoln Guardado, defends the importance that there are no setbacks. In an interview with Valor, he pointed out that the sector has been gaining momentum and that the main reasons for this were the regulatory changes and the creation of an auction calendar.

 

“Legal stability is fundamental for the sector to maintain the pace it has achieved since last year, with the return of the auctions.” Brazil has great potential for exploration and production of oil with undisputed product quality. that we had in the industry is essential to follow the threshold of billionaire investments that the country is today, “he said.

 

Carla Lacerda, president of ExxonMobil in Brazil, points out that recent regulatory changes have justified the company’s participation in recent auctions. Since last year, ExxonMobil has paid R $ 6.7 billion, in bonuses, for 23 areas.

 

For the president of the Brazilian Petroleum Institute (IBP), José Firmo, the expectation is that the interest of the oil companies in the last auctions will remain active in the 5th Round. He said he is seeking a re-approchement with the candidates to show that oil and gas is an important part of generating investment and that he hopes the next government will continue to advance the competitiveness agenda implemented in recent years.

 

He believes that, regardless of who wins the election, one of the main guidelines to guide the dialogue between the sector and the next government will be to discuss the pace of the auctions. “At what speed do we want to turn our reserves into wealth?” “Will this be the discussion?” He said.

 

Mauro Chávez Rodriguez, consultant analyst Wood Mackenzie, sees the modernization of the gas regulatory framework as one of the priority points to be discussed. “After the flexibilization of local content this has become perhaps one of the main demands of the sector, because the current framework inhibits investments, and there are already some pre-salt projects today that need a solution for the gas to be economically viable” , said the expert.

 

In all, 12 companies signed up for the 5th Round: Petrobras, ExxonMobil, Chevron, Total, BP, Shell, Equinor, Ecopetrol, CNOOC and CNPC, Wintershall, QPI.

Posted on 09/20/2018 by Valor Online

Categories: Uncategorized

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