Petrobras has partnered China National Offshore Oil Corporation (CNOOC) and China National Oil & Gas Exploration & Production Development (CNODC) to collect the biggest area on offer in Wednesday’s mega-auction of production sharing rights in the Brazilian pre-salt, winning the Buzios field with an unchallenged profit oil offer of 23.24%.
Buzios was one of the two areas where Petrobras had exercised preferential bidding rights to secure a minimum operating stake, and the state-controlled company only needed a twin 5% stake from each Chinese company to collect the areas, which attracts a minimum signature bonus of 68.19 billion reais ($17.1 billion).
The result, with no challenge from a rival bid, came for an area where Petrobras already has four floating production, storage and production units in production, and one more in construction.
As some analysts predicted, the prospects of challenging Petrobras and attempting to negotiate a co-participation agreement covering sunken costs and compensated future production deterred rival bidders.
The same pattern was repeated on for the second area on offer where Petrobras had also previously exercised preferential rights. On the Itapu field the state-controlled company took home a 100% stake in the field for the minimum profit oil share of 18.15%.
The Itapu area demanded a minimum bid of 1.77 billion reais ($443 million). Petrobras had the right to produce 350 million barrels of oil under the original ToR and the area on offer on Wednesday covered an estimated additional 300-500 million boe.
No bids were presented for production-sharing rights on the third area on offer, on the Sepia field, where Petrobras had not exercised any preferential bidding rights.
Petrobras already has the right to produce 500 million barrels on Sepia and will put an FPSO in production in the area in 2021.
The new production-sharing round offered the prospect of producing an additional 500-700 million boe on the area, but bidders were put off by the uncertainties involved in negotiating co-production and compensation agreements with Petrobras, according to an ANP source.
The same outcome occurred with Atapu, where Petrobras will put an FPSO into production next year and already has the right to produce 550 million boe on the ToR. The the area harbors 3-5 billion boe of recoverable resource according to ANP estimates, but no bidders came forwarded.
The outcome was disappointing for the Brazilian government because Sepia had offered a mandatory signature bonus of 22.86 billion reais, with a minimum 27.88% profit share. The Atapu field would have provided a signature bonus of 13.742 billion reais and a minimum profit share of 26.23%.
The two rejected areas are likely to be repackaged and offered back to the to the market in the near future, officials told Upstream at today’s event in Rio de Janeiro.
The auction of production sharing rights is offering oil and gas resources deemed surplus to the 5 billion barrels of oil covered by the transfer of rights that was granted in favour of Petrobras in 2010.
The ToR agreement, granted in 2010, gives Petrobras the right to produce 5 billion barrels of oil under an oil-for-shares agremeent, of which 3.150 billion barrels is from the Buzios field alone. Brazil’s hydrocarbons regulator has estimated that the highly productive areas offer in Wednesday’s auction harbour an additional 6-10 billion of additional oil resources.
The pre-salt auction is billed as the biggest in the history of the Brazilian oil sector, with a total of 106.5 billion reais of minimum signature bonuses for the areas on offer.
Some 34 billion reais of the revenues have already been earmarked for Petrobras to compensate for adjustments made in the value of the 5 billion barrels included in the transfer of rights agreement.
The remainder will be split up between federal (46%), state (15%) and municipal (15%) branches of government, with an additional 3% for the oil-producing states in the Brazilian federation.
On Thursday, the government will offer to investors an additional five areas as part of the sixth pre-salt round.
The five prospects on offer will include the Aram, Bumerangue, Cruzeiro do Sul, North of Brava and Southwest of Sagitario areas, the last two unitisable with their respective discoveries.
Together they are estimated to hold unrisked volumes of nearly 40 billion barrels of oil in place.
Petrobras has exercised preferential bidding rights for Aram, North of Brava and Southwest of Sagitario.