The challenges for the new oil and gas exploration auction

brasilobserver - Jun 16 2015
General director of the National Agency of Petroleum, Natural Gas and Biofuels (ANP), Magda Chambriard speaks to journalists (Photo: Divulgation)

(Leia em Português)

The lower oil prices are a major challenge for Brazilian plans to sell dozens of oil and gas fields, according to an evaluation made by the general director of the National Agency of Petroleum, Natural Gas and Biofuels (ANP), Magda Chambriard.

In event held on 2 June at the Embassy of Brazil in London, to an audience made up of about 60 foreign investors, she explained that the country had to “adjust all calculations” for the next auction, scheduled for the end of the year.

“Companies are telling us they are more conservative because of oil prices. From August to February, prices fell from $ 110 per barrel to $ 48 [today are about $ 65]. And that’s the real difference for the entire industry,” Chambriard said. “This was something that made us adjust all calculations relating to this round of bids that were ready in 2014,” he added without specifying what the agency had to adjust.

On the cases of corruption involving Petrobras, she believes that should not affect the outcome of the auction. “Every country has good and bad times, but the size of the oil sector is very large. Investor interest continues,” she said, considering that 60% of recent discoveries in deep water are in Brazil.

The 13th Bidding Round of the ANP, scheduled for 7 October, will offer 269 blocks in 22 sectors of 10 sedimentary basins. The final rules would be announced in a resolution of the National Council for Energy Policy (CNPE, in Portuguese), on 12 June.

Chambriard admitted that adjustments to the rules for contracts could be made, but hinted that there was no change in the forecast percentage for local content, which guaranteed it a priority policy of the government. “My advice to companies is: do not provide a value that is not feasible, because at some point, they will have to pay.”

The 13th round will be held under the concession regime and will not include areas of pre-salt, which can only be offered under the production sharing system. A new specific auction to the pre-salt areas can be accomplished next year or early 2017. Announced in 2007, the pre-salt discoveries are among the largest in the world. Estimates range from 30 billion to 100 billion barrels of oil.

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