OPINION: A second licensing round last week within Brazil’s “permanent offer” format was hailed as a success, although Shell’s headline-grabbing move for a single ultra-deepwater block distracted attention from what were interesting moves made at onshore tracts.

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Brazilian independents Eneva and Enauta forged an eye-catching joint venture to acquire four blocks in the under-explored Parana basin block, in southern Brazil.

Eneva is often feted as a success story in a Brazilian gas sector that was long held back by the Petrobras monopoly.

Eneva’s flagship project is a fast-expanding gas-to-wire complex in Brazil’s Parnaiba basin, where power stations nestle among tracts of gas-prospective acreage that have been yielding reserves at a replacement rate of around 250%.

The company took the same model to the Amazonas basin, acquiring the Azulao field from Petrobras in 2017.

Three successful wells led the company to build up two monetisation options by investing in modular micro liquefaction technology, as well as another gas-to-wire project: the Azulao-Jaguatirica 2 power station.

Last week, Eneva outbid a domestic rival to pick up a marginal field called Jurua in the Solimoes basin, as well as acquiring three more under-explored blocks in the Amazonas basin.

The new play in Parana is an attractive gas-prospective frontier basin, where volcanic intrusions have put off some explorers in the past.

Eneva is coming to the play with a confident air, having cracked what it says is a similar geological challenge in the distant Parnaiba basin by targeting traps under the volcanic intrusions.

If Eneva can produce gas from the Parana basin, the monetisation options appear to be even better, with the Bolivia-Brazil pipeline passing right through the acreage — and the company is keen to put its experience with gas-to-power and liquefaction to use.

The appearance of Enauta as a 30% partner on this pioneering play is also of interest.

An offshoot of the former Queiroz Galvao group, Enauta did well out of its stake in BM-C-8, a Santos basin concession, eventually cashing in on Equinor's Carcara discovery (now named Bacalhau).

Enauta’s focus on deep-water plays has included a development project for Atlanta, a heavy oil field in the Santos basin, as well as a busy frontier-driven exploration portfolio.

The company proved adroit at avoiding the pitfalls facing over-ambitious Brazilian independents almost a decade ago, and is now looking to adapt to the new oil price challenges by shifting its focus away from deep water.

Enauta’s new strategy is based on the view that the dash for higher yield upstream assets among the big international oil companies has opened up new opportunities for independents and juniors, provided assets are well chosen.

Enauta’s move into the Parana basin shows that there is still appetite for frontier acreage, but the low-cost entry ticket with Eneva puts the risk into context.

Sound business-building by these two — and other locally-grounded independents such as PetroRio, 3R and Gas Bridge — offers encouraging signs for Brazil.

Petrobras recently signalled that it expects 80% of its production to come from the ultra-productive pre-salt fields by mid-decade.

This means more opportunities will become available for others, including the onshore, shallow-water and mid-water assets that Petrobras no longer wants.

Brisk bidding from local companies last week will help boost confidence that takers will keep coming forward for all the acreage on offer.

(This is an Upstream opinion article.)