Rio de Janeiro: Brazil’s government cheered a nearly $2 billion payday from the auction on Friday of its deep-water oil fields in a sale that brought the world’s energy giants into previously-restricted territory.
The auction — delayed by a late court injunction backed by the leftist former governing party — saw six of eight so-called pre-salt blocks in Brazil’s offshore Atlantic region find buyers.
The government racked up 6.15 billion reais ($1.9 billion) in signing bonuses and the promise of far more.
“Brazil is back on the world oil scene,” said Decio Oddone, head of the National Petroleum Agency, which oversaw the auction.
Winners were determined according to the percentage of profit oil pledged to the government in production sharing agreements.
Signing bonuses fell beneath the potential 7.15 billion reais if all blocks had been sold. However, the government still came out in front, because consortiums including Shell, Exxon and Statoil pledged bigger-than-expected production percentages.
In one block, won by a consortium of Brazil’s Petrobras, Repsol and Shell, the agreed government share of profit oil was 80 per cent — far greater than the minimum 20 per cent requirement.
“I was really surprised by the (percentages).... I was very satisfied. It’s good to see the market’s appetite,” Oddone said.
“Brazil has returned to the oil and gas exploration stage in style.”
President Michel Temer called the auction “an excellent result” and forecast that the winning consortiums would ultimately generate “around $130 billion in royalties and other sources of receipts.”
The pre-salt fields, which are so called because the oil lies in ultra-deep waters and then below thick beds of salt, hold the promise of billions of barrels of oil. But they come with the challenge of operating in the deep Atlantic as well as that of the depressed state of global oil markets.
The last pre-salt auction was held four years ago, when foreign capital had a far harder time getting in on Brazil’s oil action.
— AFP
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