FOREIGN OIL FIRMS INVADES BRAZIL

FOREIGN OIL FIRMS INVADES BRAZIL

Petrobras, Petronas, TotalEnergies, Royal Dutch Shell, and Qatar Energy grabbed two blockbuster offshore fields in Brazil on Friday, raking in 11.14 billion reais ($1.96 billion) in signing bonuses for the government.

TotalEnergies, Qatar Energy and Malaysia’s Petronas won the right to develop the coveted Sepia field, while Brazil’s state-run Petrobras, formally Petroleo Brasileiro SA PETR4.SA, later entered the consortium by exercising preference rights.

Petrobras, Total and Shell won the Atapu field rights.

The auction was widely seen as a test of Brazil’s investment climate and of large oil producers’ willingness to keep spending big on traditional assets.

Eleven companies, from Exxon Mobil XOM.N to relatively small local players, had signed up for the chance to bid.

Brazil attempted to sell both fields in 2019, but neither received bids, even from Petrobras. At the time, complex legal issues and rich signing bonuses kept oil majors away.

This time, bidding terms were considered more attractive, several industry sources told Reuters, largely due to big cuts in signing bonuses. Brazil also cut the percentage of oil that must be turned over to the state, known as “profit oil”, from 26.23% to 5.89% at Atapu and from 27.88% to 15.02% at Sepia.

The fields are considered attractive as Petrobras has already discovered commercially recoverable oil in both blocks, eliminating exploration risk.

The fields could boost Brazilian oil production by 12% over the next decade and bring in almost $40 billion in investment, the nation’s Energy Ministry said on Monday. Petrobras is set to receive $6.2 billion for past investments in the two fields.

The 11 companies signed up for the auction were: Petrobras, Exxon, Shell, Galp Energia SGPS SA GALP.LS, Chevron Corp CVX.N, Ecopetrol SA ECO.CN, Equinor ASA EQNR.OL, Enauta Participacoes SA ENAT3.SA, Petronas, TotalEnergies and Qatar Energy.