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Ended! Shell destroys in pre-salt auctions and has now become one of the largest oil companies in Brazil

Paulo Nogueira
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27-10-2017 14:05:43
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shell and petrobras




Other oil giants have won 6 areas, with Petrobras and Shell leading the auctions, taking Brazil to a new era!

[supsystic-social-sharing id='1′]The government managed to raise R$ 6.15 billion in signature bonuses (amount paid at the signing of the concession contract) with the 2nd and 3rd pre-salt round auctions, informed the ANP (National Agency for Petroleum, Natural Gas and Biofuels). The forecast was to raise R$ 7.75 billion. Of the eight areas for exploration and production of oil and natural gas offered in the auctions this Friday (27), two did not receive bids. Check out the companies that won each area:

  • South of Gato do Mato: Shell and Total
  • Surroundings of Sapinhoá: Petrobras, Repsol Sinopec and Shell
  • North of Carcará: Exxon Mobil, Statoil and Petrogal
  • Peroba: Petrobras, BP and CNODC
  • Alto de Cabo Frio Oeste: Shell, CNODC and QPI
  • Alto de Cabo Frio Central: Petrobras and BP
  • Southwest of Green Turtle: no bids
  • Pau Brasil: no bid

The ANP predicted that the eight blocks would generate US$ 36 billion in investments (equivalent to around R$ 120 billion), in addition to around US$ 130 billion in royalties, oil-profit and income tax arising from the development phase of the reserves, estimated in more than 4.5 billion barrels of oil – more than a third of the country's proven reserves.

Auction started late

The auction, scheduled to start at 9 am, only started two and a half hours late. This is because, on Thursday night (26), the Federal Court of Amazonas suspended the holding of the two pre-salt auctions by means of an injunction (provisional decision).

The lawsuit's argument was that the R$ 7.75 billion worth of signing bonus with the auctions represents just over half of the Libra bidding bonus (the result of the “1st round” of bids), which was R$ 15 billion. Thus, there would be no plausible justification for the values to be so low and so harmful to public assets.

In the decision, federal judge Ricardo de Sales suspended the auctions in order to avoid “any possibility of damage to public property, especially in view of the amounts involved”.

In the morning, the AGU (Advocacy-General of the Union) filed an appeal with the Federal Regional Court of the 1st Region against the injunction. The request was accepted by the court and allowed the start of the auction.

When opening the auction, the director general of the ANP, Décio Oddone, said that the government “has succeeded against political acts that sought to impede” the negotiation. According to him, with this event, Brazil “definitely regains its space in the first world oil league”.

Shell celebrates victory

The result of the auction was considered excellent by the CEO of Shell in Brazil, André Araújo, who celebrated the fact that the company was operating in two areas.

According to him, Shell's bids in the pre-salt consolidate the company's position in Brazil. The Anglo-Dutch team won in three areas. “Our participation was super, I am extremely happy and we will be operators in two blocks, which is extremely important for us,” he told reporters.

New rules

The last auction of pre-salt areas had been in 2013, with the auction of the Libra area. At the time, Petrobras was required by law to be the sole operator of the pre-salt fields, with a stake of at least 30% in the winning consortium, and was the only company responsible for direct or indirect conduct and execution of all exploration, evaluation, development and production activities.

With the changes made by the government to the pre-salt regulatory framework last year, Petrobras is no longer obliged to act as the sole operator in these areas. However, the new law maintained the state-owned company's preemptive right to acquire, at least, 30% of participation in the consortia and the possibility of carrying out its operations.

In addition, the extension of Repetro (Special Regime for the Taxation of the Oil Chain) is also considered fundamental for the resumption of the country's oil industry. Added to this are conjunctural factors in the economy, such as low inflation and falling interest rates.

Against this backdrop, the auction caught the attention of the world's oil giants. Among the 16 companies qualified by the ANP to participate in the auction were the Americans Exxon/Mobil and Chevron, the Spanish Repsol, the British Shell, the French Total, the Norwegian Statoil and the Chinese Cnooc and CNPC.

In sharing bids, the company that offers the State, based on a fixed minimum percentage, the largest share of oil and natural gas minus the cost of production, the so-called profit oil, wins. “Bids will be judged and ranked in descending order of surplus oil for the Federal Government, and the bidder who offers the highest percentage to the Federal Government will be declared the winner”, informed the ANP.

14th round

Less attractive compared to Friday's rounds, the 14th Round of bidding for exploratory blocks, held at the end of last month, collected R$ 3.84 billion in signature bonuses - the largest in the history of auctions, with an average premium of 1,556.05%.

However, only 37 of the 287 blocks offered were sold, distributed in 16 sectors of eight sedimentary basins: Parnaíba, Potiguar, Santos, Recôncavo, Paraná, Espírito Santo, Sergipe-Alagoas and Campos. Source: Uol

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Paulo Nogueira
With technical training, I worked in the offshore oil and gas market for a few years. Today, my team and I are dedicated to bringing information from the Brazilian energy sector and the world, always with credible and up-to-date sources.