Prime oil majors set for 2nd shot at coveted Brazil ‘pre-salt’ offshore fields By Reuters

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© Reuters. FILE PHOTO: A protester in a dinosaur costume protests an auction of offshore oil blocks in the Campos, Santos, Pelotas and Potiguar Basins, which is attracting the interest of oil companies such as Chevron, Shell, Total and Petrobras

By Gram Slattery, Marta Nogueira and Sabrina Valle

RIO DE JANEIRO (Reuters) – The world’s top oil companies will battle it out in Brazil on Friday for a chance to land some of the world’s most coveted offshore oil fields, a test of the country’s investment climate and the willingness of major oil producers to continue spending big on traditional assets.

Eleven companies, from Exxon Mobil Corp (NYSE 🙂 to Royal Dutch Shell (LON 🙂 PLC to relatively small local players who are signed to bid for two fields known as Sepia and Atapu. The assets, both of which are in a productive offshore oil formation known as the “pre-salt”, have a combined signing bonus of 11.14 billion reais ($ 1.96 billion), with the government 7.138 billion reais for Sepia and 4.002 billion reais for Atapu.

Brazil tried to sell both fields in 2019, although neither of them received bids, not even from the state-run Petroleo Brasileiro SA or Petrobras. At the time, complex legal issues and heavy bonuses deterred oil companies from doing so.

According to several industry sources consulted by Reuters, the terms of the offer are seen as more attractive this time around, largely thanks to sharp cuts in signing bonuses. The government also increased the percentage of oil to be given to the state, known as “Profit Oil”, from 26.23% to 5.89% in Atapu and from 27.88% to 15.02% in Sepia lowered.

“We expect competition based on the interactions we have with CEOs,” Rodolfo Saboia, head of Brazil’s oil regulator, told Reuters.

Potential bidders include a consortium consisting of Petrobras, Exxon and Petrogal, a subsidiary of the Portuguese Galp Energia SGPS SA (OTC :), Reuters reported on Thursday. Exxon declined to comment on the matter, while neither Petrobras nor Galp immediately responded to requests for comment. Almost all parties have at least held preliminary talks with banks or operational partners.

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

If both fields are awarded, they could increase Brazilian oil production by 12% over the next decade and bring in nearly $ 40 billion in investment, the country’s energy ministry said on Monday. Petrobras would receive $ 6.2 billion in compensation for past investments in the two areas.

The 11 companies that have registered for the auction, which is scheduled for 10 a.m. local time (1300 GMT), are: Petrobras, Exxon, Shell, Petrogal, Chevron Corp (NYSE :), Ecopetrol SA (NYSE :), Equinor ASA (NYSE :), Enauta Participacoes SA, Petronas, TotalEnergies SE and Qatar Energy.

($ 1 = 5.68 reais)

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