Petrobras, Exxon, Shell, Chevron Among Winners of Brazil Pre-Salt Oil Auction

By Anonymous

The government of President Michel Temer auctioned off four blocs, with the signing bonuses totaling just over 6.8 billion reais ($1.7 billion). Bids were made by offering a percentage of profit oil, which is the proportion of gains from the fields that will go to the government.

Energy companies were eager to bid in Brazil’s last oilfield auction ahead of presidential elections in October because it’s unclear when, and under what terms, the next government might sell more blocs in the pre-salt area, according to Adriano Pires, director of Rio-based think tank Brazilian Infrastructure Center.

The presidential candidates leading the polls ahead of the Oct. 7 first-round election have broadly different economic proposals. Right-wing candidate Jair Bolsonaro favors a more hands-off policy regarding the country’s natural resources, while Fernando Haddad’s Workers’ Party has traditionally been more interventionist.

“It was more competitive because it was the last one under this government,” he said, noting the various positive elements of the auction. “Those are good areas, the pre-salt is sought after by all the companies, and the price of oil is at $80 a barrel.”

The Brazilian units of Shell and Chevron won the Saturno field with an offer of 70.2% of profit oil. The companies will pay 3.1 billion reais for the field, and each will have 50% of the consortium.

Exxon Mobil Corp.’s Brazilian unit and QPI Brasil won the Titã field, offering 23.49% of profit oil, and paying 3.1 billion reais. Exxon Mobil will have 64% of the consortium and QPI Brasil will have the remainder.

BP Energy, Ecopetrol EC 1.20% and Cnooc CEO 2.31% won the Pau Brasil field, bidding 63.79% of profit oil, and paying 500 million reais. BP will have 50% of the consortium, Cnooc will have 30% and Ecopetrol will have 20%.

Petrobras , PBR -1.31% as Brazilian oil company Petróleo Brasileiro is known, offered 10.01% of profit oil to the government and was the sole bidder for the bloc.

The auction came a day after Petrobras said it agreed to an $853.2 million settlement with U.S. and Brazilian authorities to end yearslong investigations tied to the Operation Car Wash probe of bribery and kickbacks at the company.

The settlement eased concerns about the company’s legal liabilities and will permit it to borrow more cheaply in international markets, analysts said.

The agreement “leaves behind the dark past of interference and corruption,” said Décio Oddone, director general of the ANP.

Friday’s auction was the fifth sale of areas in the pre-salt region off the southeast Brazil coast near São Paulo and Rio de Janeiro, where studies show as many as 100 billion barrels of crude are locked under salt layers far beneath the seabed.

The pre-salt reserves were discovered in 2006, but burdensome rules for their exploitation, including a rule that Petrobras had to be the operating partner with at least 30% of any consortium, discouraged interest in the area.

After the government eased those rules last year, allowing other companies to work without Petrobras if it declined to participate, interest in the offshore fields increased.

Write to Luciana Magalhães at [email protected] and Jeffrey T. Lewis at [email protected]