Petrobras oil & gas divestments could end this year

The Petrobras divestment program of oil and gas producing fields has a date set to end: December 31, 2021, as determined by the National Agency for Petroleum, Natural Gas and Biofuels (ANP).

In recent years, medium-sized oil companies have gained muscle by acquiring state-owned assets. But, starting in 2022, they will need to look for another strategy. Another expected change is the emergence of a secondary market, of leftover assets acquired from the state-owned company by independents, but considered less adequate to the strategy of these businesses.

Petrobras intensified its concession divestment program as of 2016, when it placed the reorganization of its finances at the center of its concerns and began to focus on the pre-salt. Dozens of producing fields in land and shallow water were offered for sale, in addition to exploratory areas, which have not yet been discovered. Most of them are located in the Northeast region of the country.

Part of this divestment effort also came from the ANP, which demanded from Petrobras a position on 183 paralyzed fields, without any investment decision. The regulator gave the company the option of retaining some of them or returning them. The state-owned company then decided to resume investment in some, return others and sell the rest. The deadline for getting rid of the last areas ends on December 31st.

Extension

The initial return deadline actually expired at the end of last year. But the company argued to the ANP that it was having difficulty concluding negotiations and managed to extend the deadline for another year. Sought, the agency did not say whether it will extend the date one more time.

Currently, Petrobras has six oil and gas exploration and production assets for sale. Only one of them – the Marlim field, in the Campos Basin (RJ) – is in the final bidding stage. The others entered a binding phase, of direct negotiation with interested parties.

The Petrobras field market has attracted independent oil companies focused on areas that do not require exploration effort and, therefore, do not impose on investors the risk of putting money to drill a well and not find anything.

Most of these areas are mature, that is, they are already in a phase of declining production. To extend the life of these concessions, independents only need to invest in recovery technologies, in addition to building a cost reduction plan, as every oil company does.

This has been the strategy adopted by independent oil companies that emerged in the Brazilian market recently. This is the case of PetroRio, Enauta, 3R Petroleum, PetroRecôncavo, Trident, Perenco, Origem, Imetame and Petro-Victory.

These businesses differ in size and cash, which interferes with the quality of the assets in their interests. The biggest ones usually bet in shallow water and the smaller ones, in land. This group of companies does, however, share the appetite for market share that was previously in the hands of industry giants.

Mauro Destri, director of Oil and Gas at consultancy Alvarez & Marsal, points out that production in concessions not operated by Petrobras in mature basins jumped from 4.7 thousand barrels of oil equivalent per day (boe/day) in June 2016, to 23,400 boe/day in the same month this year. The data are from the last production bulletin released by the ANP.

“Today, we are all anxious about the divestment of the Albacora and Albacora Leste fields, onshore hubs in Bahia, Sergipe, Alagoas and Potiguar (Sea and Land),” he said.

Uncertainty

Some investors question, however, whether Petrobras will be able to complete the sale of the assets this year. “These are complex processes and, as there is little official information, it is speculated that they will hardly be closed this year, despite the deadline established by the ANP and the successive postponements”, says Anabal Santos Júnior, executive director of the Brazilian Association of Independent Producers of Oil and Gas (Abpip).

He believes that, once Petrobras’ divestments are concluded, investors should resort to the auction for a permanent offer of areas for exploration, promoted by the ANP, in which areas that were not offered in past bids or were returned. For companies that focus exclusively on producing fields, the best option will be the purchase of assets from other oil companies, in addition to Petrobras.

PetroRio, for example, says that its growth is not conditioned by the state-owned sales. According to Emiliano Fernandes, PetroRio’s human resources, regulation and legal director, the company did not buy many of the state-owned assets. “It is indisputable that it has more than 90% of the market and its divestments are an opportunity. But we have a fruitful territory and this is a giant market”, he says.

The information is from the newspaper O Estado de S. Paulo.

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