Upcoming License Rounds Show Great Promise for Brazil
Recent resumption of exploration programs puts Brazil on track to be one of the world’s leading oil producers over the next 10 years, said Felipe Kury, director of Brazil’s National Petroleum, Natural Gas and Biofuels Agency.
The challenge “is to have this plurality of actors and various environments,” said Kury. For him, this is “an incredible moment” for Brazil to become a leader in the sector. He added that this possibility is concrete and real due to the productive activity that is advancing.
Kury said the report by the Federal Court of Accounts (TCU) raising the possibility of conflict due to the fact that the auctions are too close will not change the schedule established by the ANP, nor its recommendation to the National Energy Policy Council (CNPE) to maintain the scheduled dates.
“TCU is doing the work it has to do. In every round, we exchange a lot of information. And it is a work that gives robustness to the process.” On the ANP’s side, he said that the guidance received from CNPE is being followed. In addition, multiple auction offers could make it possible for a company to participate in one trading session, which was unable to bid in another, he said. “There are multiple choices.”
Kury pointed out that it was a very intense journey over the last two years to resume auctions. 72 blocks were sold with a collection of R $ 28 billion in signature bonuses. “It is a significant demonstration of the resumption of the oil exploration process in Brazil.”
The 16th Round of Exploration Oil and Gas Blocks and the 6th Pre-Salt Production Sharing Round have auctions scheduled for October 10 and November 7, respectively. The auction of Transfer of Rights surplus is scheduled for November 6.
In the case of the Transfer of Rights surplus, there is one operator, which is Petrobras, and the ANP depends on company information to compose the technical data. The auction of the ANP Permanent Offer, consisting of fields returned or in the process of being returned, exploratory blocks offered in previous rounds and not sold, as well as blocks returned to the ANP. The operation is scheduled for September 10 and has 47 companies registered to date.
Felipe Kury pointed out that the auction of the Transfer of Rights surplus is expected to raise $ 106 billion in signing bonuses. “I would say it is the largest auction ever seen in the history of Brazil.” Therefore, it was considered natural for TCU to ask for details to ensure that the process is done smoothly. Round 16 has an estimated minimum bonus of R $ 3.2 billion, if all areas are sold, with R $ 790 million of investment. Round 6 has a signing bonus of $ 7.8 billion. For the permanent offer, there is no estimate yet from the ANP.
Kury noted that auctions held two years ago and auctions planned for this year have a 20-30 year horizon for production and move the entire chain, with the possibility of changing the country’s energy matrix by injecting natural gas into the matrix. “It can be transformational for the chemical sector and industry.” With the relaxation of local content rules, said the director of the ANP, it will be possible to unlock some contracts and those that are signed already come with the new rules.
In Kury’s expectation, this production will generate resources for investment in research and development (R&D), equivalent to 1% of production. “It also drives an entire service chain and the academic community.”
He said that, as happened a few years ago with Petrobras investing in deepwater exploration research, of which it is a global leader, several other issues can be addressed with these funds generated by the R&D clause. In the last ten years, the amount invested in knowledge has totaled around $ 13 billion. “Now it should double or triple over the next ten years.” He estimated that the budget for innovation could reach $ 1.8 billion this year alone.