Government grants two pre-salt areas for R$ 11 billion

On the 17th, the government granted, in an auction with little competition, two pre-salt areas for exploration and oil processing. The sell-off brought in R$ 11 billion and is expected to generate investments of R$ 204 billion.

The market sees this auction as the last major offer of pre-salt areas destined for oil exploration in the country, given that are no more relevant available areas with high oil potential on the Brazilian coast, as well as of the growing pressures to transition to the use cleaner energy sources.

Named Sépia and Atapu, the two blocks granted had already been auctioned in 2019 but did not catch the attention of any oil companies. In this second attempt, the value of signing bonuses has been reduced by 70%.

“We have prioritized investing in giving back to society, instead of signing bonuses,” said the Minister of Mines and Energy, Bento Albuquerque, after the sale,  as he calculated that the activities conducted in the two pre-salt blocks will yield R$ 300 billion in tax revenue.

Out of the 11 qualified companies, five participated in the sell-off. In pre-salt auctions, the signature bonus is fixed and the competitive sale is won by the company or consortium that commits to delivering the largest portion of the outcome to the government.

Only Sépia, the most expensive of the two blocks, was a target of competition. A consortium composed of Total (France), Petronas (Malaysia) and Qatar Petroleum (Qatar) outbid Petrobras. The state-led company, though, exerted its preference right and decided to join the winning consortium.

The companies will pay bonuses of R$ 7 billion and have pledged to give  37.43% of the field’s oil production to Brazil, after discounting production costs. The value represents a gain of 149.20% over the established minimum.

The Atapu block was purchased by a consortium formed by Petrobras, Shell (England) and Total, which will pay a R$4 billion signature bonus and pledged to return 31.68% of the production in-site production, which represents a gain of 437.86%. The group was the only one to present a proposal for the area.

Source: Folha de S. Paulo

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