Brazil Pre-Salt Oil Auction Cleared; Some Investors Complain

Reuters

RIO DE JANEIRO, May 4 (Reuters) - The Brazilian government has approved terms for another auction of exploration rights to high potential oil prospects, in the so called pre-salt layer, but oil firms are not totally happy with the rules.

Brazil's Energy Ministry said on Thursday in the official gazette that it has cleared the round, which will be exclusive for adjacent sectors of existing exploratory areas.

Brazil's government wants to speed up oil exploration as a way to boost economic activity and help the country overcome its worst recession on record. It had previously decided to hold two more auctions, one also for pre-salt areas and another for conventional prospects. For the round which was cleared on Thursday, companies would have to accept production sharing contracts. They will need to pay a signing bonus and the company offering the largest share of oil to the government will get the licenses.

The government expects to raise 3.4 billion reais ($1.06 billion) in the signing bonus alone, of which 3 billion refer to only one area, an adjacent sector of the Carcará prospect from which Petrobras sold a 66 percent stake in November to Norway's Statoil for $2.5 billion.

Another area to be auctioned off is adjacent to the Sapinhoá field, the second largest producing field in Brazil's pre-salt layer, second only to giant Lula field. Sapinhoá produced 252,788 barrels of oil per day on average in March, according to Brazil's oil regulator ANP.

The two pre-salt auctions will happen on the same day, Oct. 27. The round for conventional areas - under concessionary contracts system where firms pay royalties to the government - is scheduled for Sept. 27.

One rule for the pre-salt auctions related to Brazil's state-controlled oil company Petróleo Brasileiro SA did not please private oil firms.

Petrobras will be allowed to decide even during the auctions if it will exercise a right to have a stake in the prospect, in the case there is a premium over the minimum percentage of oil the companies will transfer to the government.

Brazil's IBP, an association representing oil firms, said the rule brings uncertainty since the companies in a consortium will not know up to the end of the auction their shares in the venture or who will be the operator, if Petrobras leaves.

($1 = 3.18 reais)

(Additional reporting and writing by Marcelo Teixeira, in Sao Paulo; Editing by Bernard Orr)

Copyright 2017 Thomson Reuters. Click for Restrictions.

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