With much of the agenda under the Temer government and the liberal bias of the next government’s economic team, the oil and natural gas market is optimistic about Jair Bolsonaro’s new administration. Although the captain of the reserve has appointed an admiral with knowledge in the nuclear area to lead the Ministry of Mines and Energy, the oil industry expects investments and business opportunities next year, mainly due to the likely continuity of the work done by the current energy team.
By 2019, the main points of attention are related to the area of the onerous assignment. First, because the conclusion of the negotiations between the Union and Petrobras on the revision of the onerous assignment agreement is expected. On another front, the market awaits the realization of the “mega-auction” of the excess of the onerous assignment.
In order to have the auction, however, it is necessary the approval in the Senate of the bill that allows Petrobras to sell up to 70% participation in the onerous assignment. With no progress in the Senate so far, the government is trying a “plan B” to make the auction viable through an approval by the Union Court of Audit (TCU).
Despite the uncertainty regarding the mega-auction, the market already works with the two auctions pre-approved by the National Council of Energy Policy (CNPE) for 2019: the 6th Round of the pre-salt and the 16th Round of bidding for concession areas. Also in force as of this year is the permanent offer of exploratory blocks onshore and offshore by the ANP.
For an executive from a major private sector company, even if the surplus mega-auction does not occur in 2019 and the Bolsonaro administration does not perform as expected, the total area bid the last two years has already results in a lot of work – and investments – for the oil companies.
According to data from the National Agency for Petroleum, Natural Gas and Biofuels (ANP), the auctions held in 2017 and 2018 and those foreseen for next year, without considering the surplus of the onerous assignment, should demand the construction of 22 platforms of production of oil and gas, with projected investments of hundreds of billion Reais.
For the director general of the ANP, Décio Oddone, the public statements made by the team of Jair Bolsonaro in the area of oil and gas are aligned with the work of ANP. “I have talked to the Bolsonaro government transition team, the conversations are very good, what they say is very much in line with what we are doing, but I do not have the mandate to speak of them, what they are going to do,” he said, in a recent event in Rio.
Another point of attention of the market involves the policy of fuel prices. The subsidy for diesel is expected to expire at the end of the year and will not be renewed. In addition, Petrobras, under its future president, Roberto Castello Branco, should keep the prices of derivatives in line with the international market.
“No one knows what the Bolsonaro government’s policy for the oil and gas sector is. We had a perspective with the appointment of the president of Petrobras, which is well in line with current policy, and we do not expect it to change much from the concept of parity with imports “said Walter de Vitto, an analyst at Tendências Consultoria. One question is still the reform of the natural gas market. The current version of the bill on the subject is already very different from the original version from the “Gas to Grow” program.
The regulation of the free gas market, for example, that would be an attribution of the ANP, by the original version, became the competence of the States, in the new text. The Brazilian Institute of Petroleum, Natural Gas and Biofuels (IBP) criticized the changes and argued that the topic should be discussed again by the new legislature