The auction of surplus volumes from the transfer of rights in the areas of Sépia and Atapu, in the Santos Basin pre-salt, represents, for the oil companies, immediate access to projects in the operational phase and may, depending on the results, attract two new producers. Among the eleven companies qualified for the round, scheduled for December 17, ExxonMobil and the Colombian Ecopetrol are seeking an opportunity in the tender to start producing the first volumes of oil in Brazil. Both operate in the Brazilian market, but only in exploratory assets or in the production development phase.
In addition to them, Chevron – which is getting rid of all operating assets in Brazil to focus on the pre-salt – can also guarantee, at the auction, a new source of cash generation in the country. The Brazilian companies Petrobras and Enauta and the multinationals Equinor (Norway), Petrogal (Portugal/China), Petronas (Malaysia), Qatar Petroleum (Qatar), Shell (United Kingdom) and TotalEnergies (France), which already produce in the country, complete the list of oil companies able to participate in the tender and that will be able, from the auction of Sépia and Atapu, to diversify their sources of revenue in Brazil.
The winners of the round will have to pay a total of R$11.1 billion (US$2 billion) in signing bonuses, plus $6.45 billion in financial compensation to Petrobras for investments made in the fields.
This money can compete with the investment commitments made by companies in the country. All eleven qualified companies acquired assets in Brazilian auctions in recent years. Wood Mackenzie highlights that Sépia and Atapu can generate cash flow for the companies, while the other projects in Brazil mature.
Petrobras exercised the right of preference for the acquisition of the two areas, with a minimum percentage of 30%. According to the consultancy, Shell, TotalEnergies and Petrogal – partners of the Brazilian state-owned company in the shared deposit of Atapu, which is connected to concession BM-S-11A (West of Atapu) – are also natural candidates for the auction.
In the assessment of Wood Mackenzie, Ecopetrol, Petronas and Qatar Petroleum fall into the category of oil companies that are expanding into deep waters – and that, therefore, may be interested in the tender. ExxonMobil, Equinor, Enauta and Chevron are cited as companies in the portfolio restructuring phase in Brazil and interested in assets in the operational phase.
The surpluses from the transfer of rights are the discovered volumes of oil that exceed the 5 billion barrels that Petrobras has the right to produce in the pre-salt, as part of the contract signed in 2010, within the operation that culminated in the increase of the Union’s share in the state-owned capital.
The surplus volumes from Sépia and Atapu were offered for the first time in 2019. At the time, the areas did not arouse the interest of the oil companies, who saw many risks in the rules of the round, the main one being the need to negotiate with Petrobras, after signing the contracts, the amount of compensation for the investments made in the assets.
With the failure of the 2019 auction, the government revised some rules. The main news is that, after negotiations between Petrobras and the state-owned Pré-Sal Petróleo SA (PPSA), the amount of financial compensation to be paid to the Brazilian oil company was calculated prior to the auction. Signature bonuses were also reduced by 70% compared to the terms of the 2019 bid.
In the assessment of Wood Mackenzie, the auction of surplus Sepia and Atapu will be an “exciting test” for the discipline of capital at a time when oil companies are taking advantage of the appreciation of the commodity to recover cash, after a difficult 2020 for the sector, and assume growing commitments to the energy transition. In a report on the auction, the international consultancy highlights that there were improvements in the terms of the bid, but that the economic results of Atapu and Sépia “are still not convincing”.
Brazil Energy Insight 
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