Brazil Oil Auction Draws $2.2 Billion
Ten companies on Thursday agreed to pay more than $2 billion for the exploration and production rights in 12 offshore oil blocks in Brazil, in what could be a promising sign for even bigger upcoming oil auctions.
The most heavily sought after areas in the Thursday auction directly border Brazil's so-called pre-salt area, a coveted zone in which billions of barrels of oil are trapped under a thick layer of salt beneath the ocean floor.
Pre-salt blocks will be up for grabs in two much larger auctions scheduled for November 6 and November 7, including the so-called transfer-of-rights auction, which is expected to fetch around $25 billion for the government.
On Thursday, companies agreed to pay the Brazilian government 8.9 billion reais ($2.2 billion) in signing bonuses.
The biggest move came from a France's Total SA, which, in a consortium with Malaysia's Petronas and Qatar Petroleum, dropped 4.029 billion reais for one block abutting the pre-salt area. Total will be the operator, with a 40% stake. Those areas, known as "fringe blocks," are believed to share some geology with the pre-salt area.
After the auction, Mines and Energy Minister Bento Albuquerque said the results were "well above expectations," pointing out that minimum signing bonus for all areas together combined was just 3.2 billion reais.
Other significant winning bids included a bid of 1.116 billion reais by Petronas for a block in the Campos Basin, and a 2.045 billion reais bid from Brazil's Petrobras and BP Plc for a separate block.
Petronas made another significant move into Brazil in April, when it purchased two oilfields from state-run Petrobras for $1.29 billion.
Royal Dutch Shell Plc, Wintershall Dea GmbH, Chevron Corp, Exxon Mobil Corp and Repsol SA also won at least minority stakes in exploration blocks.
Twenty-four blocks, many in more marginal oil producing areas, failed to attract a bidder and will be placed in a new program the Brazilian government calls "permanent offer."
Seven blocks near the ecologically sensitive Abrolhos archipelago in northeastern Brazil received no bids, after environmental litigation involving federal prosecutors was disclosed on Wednesday.
In a statement following results, Total said that while it was committed to pursuing deepwater opportunities in Brazil, in would not join other oil majors in participating in the transfer-of-rights round as the competitive process was geared toward non-operating stakes.
In addition to the t10 companies that made successful bids in oil blocks, Norway's Equinor ASA made one unsuccessful bid.
Six companies - Murphy Oil Corp, Enauta Partipacoes SA, Karoon Energy Ltd, Petrogal, Ecopetrol SA and China National Offshore Oil Corp Ltd - registered for the auction but did not place offers.
(Reporting by Gram Slattery and Marta Nogueira; additional reporting by Rodrigo Viga Gaier; editing by Richard Pullin and Steve Orlofsky)