So what went wrong? Time for finger pointing…

Nov 8, 2019

The pre-salt auction week ends with more than R $ 75 billion collected, the contracting of excess volumes of Buzios and Itapu, which may exceed 10 billion barrels, and the exploration of Aram, with potential to be one of the largest fields in the country.

“Still, it left a lot of people wondering what went wrong.” These were areas mostly contracted by Petrobras, which used the Sharing Law to guarantee 30% of three blocks of the 6th round, and to submit a proposal only to Aram, the only bidder, of the five offered.

“Does it mean what? That we know how to appropriate our resources or that we do not understand the main message so far: Brazil is very complicated, very difficult to invest there,” said Minister Paulo Guedes, about disinterest from private and international companies.

For the government, Petrobras inhibited competition in round 6, which was expected. The biggest surprise, however, was that the company did not bid the areas in which it expressed its preference.

“I am surprised (…) what we need now is to reflect on the reasons that led Petrobras not to exercise the preemptive right,” said ANP Director-General Décio Oddone, who added:

– “Petrobras is a company, which reports to its Board of Directors. We are concerned about the success of the rounds.”

For Senator Jose Serra, author of the project that ends the preference of Petrobras, the company bluffed. In 2016, the project that replaced the one-time operation with preference came from Serra. Three years later, the senator concludes that the pre-salt is a success in itself and Petrobras hinders the attraction of investments.

In the press, there is talk of “failure”, frustration “and criticism of the sharing model – Petrobras’ preference and the pre-salt polygon, which obliges the government to offer areas only under the sharing regime in that region.

Press: Folha, Petrobras’ absence in auction bids irritates Bolsonaro government;  Estadão, Government evaluates to change rules for pre-salt after auction without bids, in Valor, Petrobras, again, saves pre-salt auction.

In practice, the change in the sharing regime, which depends on Congress, gains new momentum for 2020. This is all about the will of the Bolsonaro government, to support revising the rules.

 

The BEI Staff conducted a quick survey that confirms all of the above reasons. However, the most sensible remark came from an experienced international oil executive“ Not really surprised by the lack of interest. Companies have already spent a ton of money recently that they need to get moving developing their areas”

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