ANP estimates – Auctioned oil blocks will generate $ 100 billion in royalties over 27 years

October 11, 2019

At its peak, the agency expects production to reach 500,000 barrels. Minister says bonus paid was triple of expected

The twelve auctioned blocks will require the installation of three to four new platforms between Rio de Janeiro and Sao Paulo, according to the National Petroleum Agency (ANP). The auctioned off areas in the Campos and Santos basins will produce between 400,000 and 500,000 barrels of oil per day at the peak of activity.

In addition, the ANP pointed out, the areas will generate royalties and special participation of about R $ 100 billion to the public coffers over 27 years duration of the contracts.

The government now targets the auctions to be held in November in pre-salt areas. Decio Oddone, ANP’s director-general, said the 6th Round (under the sharing regime) and the transfer of rights surplus should generate a revenue exceeding R$ 106 billion bringing less risk to investors.

The concession brings areas with greater risk. The November 7 sharing auction has more detailed reserve studies. It is an auction with lower risk. Petrobras has already signaled preference in three of the five areas. In the transfer of rights surplus on November 6, it is already a discovered reserve. Therefore, the risk is volumetric (ie, relative to the amount of oil available). The areas have between 6 and 15 billion oil reserves, and Petrobras has already signaled interest in two of the four areas.

Bento Albuquerque, Minister of Mines and Energy, said the new auctions will have strong industry interest:

Expectations are positive, with the signaling of international companies. Today’s auction was nearly three times the amount of the bonus we were expecting. For this reason, the auctions of the transfer of rights and sharing will be equally successful – said the minister.

Shell took two blocks in the Campos Basin. According to the company’s president, Andre Araújo, the result was positive for the country.

We won some and lost one. It’s part of the game. We are happy. At the end of the day, it was a bonus of almost R $ 9 billion. It is a very high premium. In the blocks we won, we will forward the initial development as soon as possible – said Araújo.

Antônio Guimarães, executive secretary of Exploration and Production of the Brazilian Institute of Petroleum (IBP), also evaluated the outcome of the auction as positive.

It was very interesting to see an oil company like Petronas entering Brazil and winning an highly competitive block, paying R$ 1 billion for the area. This reinforces how attractive the environment in Brazil is. The result shows that we will have diversity, with Chevron, BP and Shell entering strong – said Guimarães.

Petrobras was ‘surgical’

He assessed Petrobras’ participation as selective. The state president, Roberto Castello Branco, who attended the event, left the event early after the two offers by the company.

It was from Petrobras the greatest premium paid at the auction and in the history of the events under the concession regime. The state-owned company in partnership with BP in block CM-477 offered a premium of 1,744.10%.

However, in absolute terms, the largest bonus paid was R $ 4.029 billion for block CM-541, awarded to the consortium of Total, Petronas and QPI.  The consortium made by Petrobras and Equinor offered in the same area a bonus of $ 4.090 billion, but lost the dispute for having offered a smaller minimum exploratory program.

Petrobras was selective and competed hard in two blocks that were really of great potential. But it took one. The Campos Basin eventually dominated the scene – said Guimarães.

Source: O Globo

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