01 March 2019, Sao Paulo — The Brazilian government will offer in an auction in October production sharing contracts for companies to explore areas that it says hold “significant volumes of oil and gas” off its coast, the country’s energy council CNPE said on Thursday.
At a meeting in Brasilia, CNPE decided on some rules for the auction that will offer exploration licenses for reserves adjacent to the so-called Transfer of Rights area, a high-yield, pre-salt region currently being explored by state-controlled oil company Petróleo Brasileiro SA, or Petrobras.
The Transfer of Rights area is the result of a 2010 deal between the Brazilian government and Petrobras, related to a huge share offering that would have diluted the government’s stake.
To maintain control of the company, the Brazilian government sold Petrobras the rights to explore 5 billion barrels of oil in a pre-salt area off the coast for 74.8 billion reais at the time. With that money, it bought additional Petrobras shares.
But Brazil’s oil regulator now estimates there are around 17 billion barrels of recoverable oil in the area, and the government is seeking to auction rights for the exploration of the excess oil.
Petrobras has the right of first refusal over those areas. It must express interest before the auction if it wishes to hold more than 30 percent stakes in the reserves, which have been named Atapu, Buzios, Itapu and Sépia.
It is likely that the oil company will partner with other oil majors, as it has in recent oil auctions in Brazil.