Brazil Changes Relinquishment Rules for Exploration Licenses

Brazil's National Petroleum Agency is revising its policy on when exploration licenses will have to be relinquished. Previously, companies could return half of the areas in order to make future offerings more dynamic. Now, if a discovery has not been made after a fixed term, the block will have to be completely relinquished. "The relinquished blocks and blocks that don't get sold will be very quickly re-offered in new licensing rounds," ANP director John Forman said during a presentation of areas, adding that auctions could soon become more frequent. As for basic exploration deadlines, these would vary from two to six years depending on the area, with companies being allowed to extend them by one or two years if they drill additional exploratory wells.

Despite stricter relinquishment rules, the auction scheme is becoming more flexible. Brazil will offer oil blocks in nine basins in June 2003 and will allow bidders to buy smaller parcels of an area in hopes of luring small companies to the auction. The ANP previously offered only large fixed blocks. At the next auction, ANP will put up for sale licenses for 824 of the offshore units, or "cells", and 298 onshore units in a total of 21 sectors. The total area offered is 195,701 square kilometers. The ANP said it would not be able to come up with precise geological data for each block this time, and will only provide "regional" data, but companies would receive bonus quotas in the form of seismic data and even drilled wells in some cases. The basins chosen for the auction include Pelotas, Santos, Campos, Espirito Santo, Jequitinhonha, Reconcavo, Potiguar, Barreirinhas and Foz do Amazonas.