The head of Brazil’s hydrocarbons regulator has dismissed suggestions that the country will be forced to postpone at least one of the three licensing rounds scheduled to take place in the final quarter of 2019, writes Gareth Chetwynd.

Decio Oddone, director general of Brazil’s National Petroleum Agency (ANP), who had earlier dropped his own hint that delaying might be a good idea, came out of a meeting with Economy Minister Paulo Guedes and said the schedule is being maintained and stated that “the demand is there”.

Brazil is scheduled to stage its 16th licensing round for E&P concessions on 10 October, followed by a mega sale of production rights for pre-salt oil deemed surplus to an existing Transfer of Rights (ToR) agreement with state-controlled Petrobras, which is scheduled for 28 October.

Finally, Brazil will hold its sixth pre-salt round on 7 November, offering production sharing rights on an additional five prospects.

The ToR surplus volume sale offers access to an estimated 6 billion to 10 billion barrels of recoverable pre-salt oil, with minimum bonuses totalling the equivalent of about $26 billion.

There have been growing concerns among international oil companies on whether they will be given access to adequate data in time to get internal approvals for such large front-end investments. These concerns have been accentuated by the contractual complexity of the offering and a perceived lack of certainty over the exact amounts that will be due to pay to Petrobras to compensate the state-controlled company for billions of dollars of investment already sunk into the ToR areas, and the impact of sharing production on its own output curve.

“This is asking a lot of the oil companies. It is not easy to ask your board to fund something as big as the surplus auction and then go back and say you want to bid two weeks later for more Brazilian pre-salt acreage,” said a manager with one European oil company.

The first official hint of a delaying move came recently from Oddone, when he suggested he “would agree” with a decision to postpone Brazil’s 16th round.

Oddone has avoided any comment on the ToR surplus during the long phase of negotiations between Petrobras and the federal government.

Suggestions that the revenue from the ToR surplus volume round will be used as a negotiating chip with indebted state governments have turned the topic into a politically sensitive issue.

Weekly

ANP head Oddone rejects claims Brazil will delay licensing rounds