Bid Round Raises Optimism in Brazil's Deep Water Industry

On December 13, 193 blocks were auctioned in Brazil’s oil and gas licensing round, signaling strong optimism for the industry, according to Wood Mackenzie.

Highlights from these bid rounds included:

• The total amount in bonuses was US$85 million

• 44 blocks were acquired in the Pelotas Basin, a frontier area. Petrobras will operate 29 and Chevron 15

• All Basins managed to attract bids, even Parana Basin

• A single Brazilian operator, Elysian, acquired 122 onshore blocks

• BP, Equinor, Karoon and CNOOC will operate blocks in the Santos Basin

Commenting on the results, Marcelo de Assis, research director at Wood Mackenzie, said: “The Brazilian bid round was successful and injected some optimism in the Brazilian deep water after the recent disappointments in the pre-salt exploration. This bid round opened a new frontier, Pelotas Basin, with consortiums led by Petrobras disputing areas with Chevron. Chevron was the biggest spender. After the discoveries in Namibia and ongoing activities in Uruguay, explorers are reevaluating Pelotas in Brazil.”

According to de Assis, Petrobras concentrated its bids in Pelotas only. It was a surprise that Petrobras is opening another frontier area besides the Equatorial Margin, after more than a decade of exploration efforts in Campos and Santos Basins. Petrobras partnered with Shell and Shell and CNOCC, depending on the blocks.

BP was the sole bidder for production sharing contracts in the pre-salt polygon. It has acquired the Tupinambá block offering 6.50% of government profit oil (sole bidding parameter), which was close to the minimum (4.88%). This area is adjacent to another block operated by BP.