Shell defends continuity of oil auctions in Brazil

Nov 29, 2019

The president of the Brazilian oil company, André Araújo, says that any interruption in the bidding agenda would affect the operators and suppliers of the oil and gas chain.

Shell considers Brazil an attractive country for the oil and gas industry, but the government must seek actions to maintain its attractiveness in the face of international competition. Care should also be taken to ensure that the auction calendar is not interrupted by the discussion of concession or sharing as the best pre-salt exploration model. The statements were made yesterday by the president of Shell in Brazil, André Araújo, in an event in Rio.

In the executive’s evaluation, any interruption in the bidding process would affect the operators, but especially the suppliers of the oil and gas chain.

“My expectation is that auctions will not stop, because that was one of the victories the industry has had in recent years. It [the auction calendar] has a big impact on us operators, but especially on the supply chain. We have seen, in practice, that the interruption of auctions for a long time causes a very large disruption in our suppliers, ”said the executive to Valor in the ANP Technological Innovation Award.

“We just don’t want this debate [about choosing the model] to turn us back on a series of advances that have been made in the industry.” About which exploration model would be the most appropriate, the executive reiterated the preference for the concession model. , while stressing that Shell has also worked well with the production sharing system.

In addition to concerns about the continuity of the auctions, the president of Shell Brasil said that the industry needs “competitive terms and conditions” in federal government bids. “We need to make sure that the conditions offered, in whatever model, will be attractive to the industry. You may have a very bad concession project that is not competitively attractive, ”he said.

Asked if these statements would relate to the need to negotiate compensation for Petrobras in the eventual exploration of areas of the TOR auction in which Shell did not bid – Araújo denied. For him, the situation of the bidding areas of TOR “was very specific” and therefore does not represent the reality of most pre-salt.

“Brazil, for Shell, is a priority. The fact that we did not participate in the last two auctions has no significance with the attractiveness of Brazil, ”he said in reference to the 6th Pre-Salt Sharing Round and the TOR auction. He recalled that Shell had participated in the 16th Concession Round two weeks before those auctions and invested in other sectors, such as gas power generation. “Brazil is an attractive country and Shell is ready to invest,” he added.

Regarding claims by competitors about discoveries in other parts of the world, which could deflect interest in Brazil, Araújo stated that “this type of placement only reinforces the need for the country to understand that it has to be globally competitive.” “Everyone has capital limitations and that capital will flow to places that are attractive,” he said, adding that Brazil is attractive. “Overseas has to be a motivator for us to remain competitive,” he said.

This month Valor showed that, for BP Energy Brazil’s president, Adriano Bastos, investments that did not come to Brazil in the last two auctions will not come next year, even if the areas are again offered in better conditions. On the occasion, the executive cited discoveries in Iran and Saudi Aramco’s future IPO as opportunities that will compete with oil companies for pre-salt.

Araújo admitted that the operation in Brazil may be “more complex” than other new ones in the world. “In some ways, pre-salt is understood as an easy-to-drill oil pool. In fact, it is a big challenge, unlike other places in the world. ”He said the pre-salt is a“ quite complex ”area, 200 km from the coast and, in some cases, with 2,000 meters of water depth. and another 5,000 or 6,000 meters until you reach the deposit. “This creates some complexity that Brazil has overcome very well, but they are always challenges.”

Source: Valor

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