Auctions of Records

November 5, 2019

The two exploratory block auctions that the ANP will promote today and tomorrow are marked by record numbers, starting with the huge numbers that generate huge expectations in the industry and in the three Brazilian administrative spheres.

Treated by the government as the biggest auction of all time, the TOR round will offer areas with a total bonus of R $ 106.561 billion – 2.6 times the sum of the other six sharing bonuses, including the one that is currently scheduled for this Thursday (7/11).

The big difference is mainly due to the Buzios block, whose bonus of almost R $ 70 billion is by far the largest of all assets offered in production sharing auctions. According to the ranking, Sepia has a bonus of R $ 23 billion, still well above that of Libra (R $ 15 billion), in the first round, in third place.

Of the total bonus amount, R $ 34.5 billion will go to Petrobras and just over R $ 48 billion to the Union. Of the remaining, 3% goes to the producing state (Rio de Janeiro); 15% for other states and 15% for municipalities – a division that required months of negotiations between the parties involved.

The ANP estimates that, alone, the TOR auction could generate demand for 17 platforms, enabling the production of up to 2 million b / d of oil, R $ 420 million in investments and R $ 1.956 billion in taxes – similar figures to of all auctions held until 2016 or between 2017 and this year combined.

IHS Markit estimates that there will be 7 billion boe in recoverable reserves in the areas that will be offered.

The sixth round of sharing, scheduled for November 7, will offer the largest exploratory area, with 8.6 thousand km². This is 40% higher than the total available in the third round (6,100 km²), which appears in the second position among the sharing auctions.

Occupying 4,476,000 km², Aram is the largest block ever included in a round of production sharing by the ANP – the second largest, at 3,674,000 km², was Alto de Cabo Frio Central, awarded by Petrobras and BP Energy in the third round. .

Petrobras will have a mandatory 30% stake as operator in the Aram (R $ 5.05 billion bonus), Suloeste de Sagitario (R $ 500 million) and Norte de Brava (US $ 600 million) blocks, for which it has exercised right of first refusal. Bumerangue and Cruzeiro do Sul subscription bonuses are R $ 550 million and R $ 1,150 billion, respectively.

Majors and NOCs

In all, 14 companies are qualified for TOR: BP, Chevron, CNOOC Brazil Oil & Gas, CNOOC Petroleum Brazil, Ecopetrol, Equinor, ExxonMobil, Petrogal, Petrobras, QPI, Shell, Total and Wintershall.

However, at least two majors – BP Energy and Total – have announced they will not participate in the round. Petrobras anticipated that it will only dispute the areas for which it has exercised the preemptive right (Buzios and Atapu).

With the exception of Total, all entrants in the surplus auction are eligible to participate in the 6th sharing round, which will also include CNODC, Compañia Española de Petróleos (Cepsa), Murphy and Repsol.

“It will be a puzzle. We do not know yet who will attend the two events. As there are two auctions in a row, those who are unsuccessful on the first day trading will come hard in the pre-salt, ”says KPMG Energy and Natural Resources partner KPMG, Anderson Dutra.

The tight schedule of the rounds was questioned by the Federal Court of Audit (TCU), in a report published in September. For the agency, revenue collection from the 16th round, held in October, and the sixth sharing could be affected by the proximity to the auction of surplus.

Despite the concern, the concessions round performed well and, with R $ 8.9 billion in revenues and 322% premium, went down in history as the largest concession ever made.

“Watershed”

Last week, the Association of Petroleum Engineers of Petrobras (AEPET) filed a lawsuit in the Federal Court of São Paulo asking for the suspension of the auction of surplus. The entity argues that the bidding has no legal provision and that its holding of auction will bring “irreparable damage” to the country.

Sought, the MME stated that “the auction and the review observed due process of law” and that the Federal Attorney General (AGU) is acting in the process.

For Paulo Valois, a partner at Schmidt Valois, the TOR auction will, in practice, be a watershed for the oil industry in Brazil, placing the country in an internationally prominent position. “In my opinion, it will represent the final landing of supermajors in Brazil,” predicts the lawyer.

 

Source: BE Oil

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