Small Operators to Demand Royalty Exemption, More Marginal Fields

Appom, the association of small Brazilian oil companies operating in marginal fields, plans next year to seek exemption from royalties and ask federal energy company Petrobras (NYSE: PBR) to relinquish about 150 mature fields for future concession rounds, Appom VP Claudio Goulart told BNamericas.

"The normative commission [of Appom] is preparing for action next year because it is waiting for changes in the government to be concluded," he said, referring to the January 1 ceremony to mark the second term of President Luiz Inacio Lula da Silva.

Appom was created in February this year after hydrocarbons regulator ANP auctioned licenses for a second time to small companies to operate old unproductive onshore fields known as marginal fields. The bidding attracted small independent oil companies as well as new entrants into the oil industry, including many engineering companies.

"Because we are small, any help in overcoming the natural threats in the sector counts, Goulart said.

As far as new auctions for marginal areas are concerned, Appom estimates point to a potential 0.7% of Brazil's total production if the inactive mature fields controlled by Petrobras are awarded to the small companies.

Brazil produces some 2.3Mboe/d, over 90% of which is produced by Petrobras.

ANP has been trying to convince Petrobras to relinquish the fields for the past two years.

"To Petrobras and other large companies, production from these fields is insignificant, but not to us," Goulart said.

Appom is, however, optimistic about its chances of success next year, taking into account ANP's current board is a strong supporter of incentives for small oil companies and that Lula wants to boost the economy and job creation in his second four-year term, he added.

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