(Bloomberg) -- Brazil and Mexico are preparing to compete for investments from some of the same oil majors when they hold auctions that are only a week apart at a time the price rout is prompting spending cuts.
Royal Dutch Shell Plc, Statoil ASA and Cnooc Ltd. have registered to compete for the next auctions in both Mexico and Brazil, scheduled for Sept. 30 and Oct. 7, respectively. Mexico has already sweetened terms for producers after the country’s first-ever auction on July 15 only drew bids for two of the 14 blocks for sale.
“In times of low oil prices, all companies need low costs and promising returns,” John Forman, a consultant and former director at Brazil’s oil regulator, said in an interview in Rio de Janeiro. “Brazil and Mexico will compete for resources and low-cost projects will be key.”
Brazil’s oil regulator, known as ANP, released Monday a list of the 37 companies qualified to participate in the first offshore round in almost two years. BP Plc, Exxon Mobil Corp. and Galp Energia SPGS SA are among the competitors. In Mexico, 20 companies are qualified to bid for rights to produce at nine shallow-water fields in the Gulf of Mexico, including Chevron Corp. and Oil and Natural Gas Corp., or ONGC.
Brazil slowed the pace of oil auctions after it discovered giant deposits in the so-called pre-salt region almost a decade ago, and then decided to overhaul the country’s oil legislation to increase the government’s control of the resources. No acreage in the pre-salt region will be offered in the next bid round.
“All of a sudden companies saw their revenues fall by half, and that forces cost cuts and greater selectivity in investments,” Jorge Camargo, the head of the Brazilian Petroleum Institute, an industry lobby known as IBP.
To contact the reporters on this story: Sabrina Valle in Rio de Janeiro at firstname.lastname@example.org; Adam Williams in Mexico City at email@example.com To contact the editors responsible for this story: David Marino at firstname.lastname@example.org Peter Millard, Robin Saponar
Copyright 2017 Bloomberg News.
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