Shell defends concession model for next pre-salt rounds

Nov 11, 2019

It is time for Brazil to reflect on the application of the concession regime in forthcoming bidding for oil and gas exploration blocks, in order to bring about further simplification in the process, said the president of Shell in Brazil, André Araujo.

The oil company is the main private producer in the Brazilian pre-salt and the second largest oil producer in Brazil, behind Petrobras.

“The big pre-salt auctions have already taken place … it’s time for us to think very openly about a single concession regime, which is the one that makes the market clearly define what the bonus will be like,” said the executive, attending an event at FGV, in Rio de Janeiro. Under the concession regime, the best signature bonus offer to the government and the largest exploratory program will win the bid.

After winning the contract, the company is entitled to all oil that can be found and must pay royalties to the government.

Under the sharing scheme currently used for pre-salt, the signing bonus is fixed, and the company still pays a surplus in oil to the government, which is the defining factor of the auction winner.

Shell’s statement was made after experts blamed the excessively high bonus on frustration at last week’s pre-salt auctions.

Source: Epoca Negocios

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