Two auctions on Oct. 7 offer 13 pre-salt blocks and more than 300 areas under a concession model. Reuters reports that companies are seeking new supply sources and more diversified portfolios.
Brazil is holding two major auctions of oil and gas exploration areas on Oct. 7. The production-sharing round offers 13 pre-salt blocks, while the concession round will put 22 exploration sectors covering more than 300 blocks on offer, Reuters reported.
Nineteen companies, including Petrobras, Chevron, BP, TotalEnergies and Shell, are eligible for the pre-salt auction. Forty-six companies are listed for the second round. Both auctions use a permanent-offer process: areas are put up after companies declare interest.
Interest in Brazilian assets is rising amid higher oil prices and companies’ efforts to diversify their portfolios, including away from regions facing greater geopolitical risks. Edmar Almeida, a professor and researcher at the Energy Institute of the Pontifical Catholic University of Rio de Janeiro, told Reuters that Brazil naturally fits the portfolios of companies seeking to avoid concentrating projects in such regions. He also said independent Brazilian producers need to replenish their exploration portfolios.
Thiago Silva, an oil and gas partner at law firm Lobo de Rizzo, said all areas on offer have attracted interest, though it is not yet known how many will draw multiple bidders. He added that a more attractive business climate could also help revive investment in onshore oil and gas assets.
The pre-salt areas are in the Campos and Santos basins. The concession round also includes those basins as well as Potiguar, Recôncavo, Parnaíba, Ceará, Espírito Santo and Tucano Sul. Experts cited the absence of areas in the Foz do Amazonas basin as a drawback. The region is considered a promising frontier for exploration, but blocks there require renewed joint pre-authorization from the ministries of mines and energy and the environment.
Marcio Felix, head of the Brazilian Association of Independent Oil and Gas Producers and a former ministry secretary, told Reuters that international interest in Brazil as a reliable supplier is evident. Former National Petroleum Agency director Décio Oddone also described the country as attractive to investors, citing energy security and recent Petrobras discoveries near the mouth of the Amazon.
Oddone said the results of Brazil’s first-round elections had also strengthened the sector’s outlook. In his assessment, the new Congress will be more conservative and business-oriented, while the presidential race remains unsettled. His comments about a possible Flávio Bolsonaro victory and the policies of a potential government are an expert’s assessment, not an election result.