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sábado, 18 de mayo de 2013

Brazil sees strong demand at first oil: gas auction in five years! (Gulf)



Global energy companies showed strong interest early yesterday at Brazil’s first auction for oil and natural gas rights in five years, alleviating fears that government intervention and growth in new global supplies might crimp enthusiasm over the South American country’s oil sector.

With offers coming in at as much as 40 times the minimum bids set by the government, strong demand early in the auction  suggested that investors remain anxious to be in Brazil following discoveries of massive new offshore reserves in 2007.

The two-day auction by Brazil’s national oil regulator began with the sale of onshore blocks in the northeastern Parnaiba basin and offshore blocks in the Foz do Amazonas basin, near the mouth of the Amazon river, and in the Barreirinhas basin.

Bids from state-run energy company Petroleo Brasileiro, Portugal’s Galp Energia SGPS and OGX Petroleo e Gas, the oil startup controlled by Brazilianbnaire Eike Batista, won early onshore blocks.

Britain’s BP Group and France’s Total were among the successful bidders for the offshore Amazon blocks, located just south of a major 2012 oil discovery off the coast of French Guyana. One bid, a joint offer by Total, BP and Petrobras, was 38% higher than the minimum bid of 9.02mn reais ($4.49mn).

On offer are rights to 289 onshore and offshore exploration and production blocks that add up to an area roughly the size of Bangladesh. The blocks, in regions outside the offshore swath near Rio de Janeiro where the big recent reserves were discovered, are estimated to contain at least 35bn barrels of oil, or just over a year’s worth of global crude oil demand.
Though a record number of participants signed up to take part in the auction, government officials, industry suppliers and others are watching the sale closely to determine how much the 64 Brazilian and international companies registered are willing to bet on Brazilian oil and gas.

Officials have been eager to know whether interest will remain strong among major multinational energy companies or whether smaller, adventuresome investors could prove more willing than bigger competitors.

Also of interest is how much appetite may come from the state-run energy companies of other developing countries, which are increasingly seeking cross-border ventures with like-minded enterprises.

Doubts ahead of the auction reflect what is a dramatically different energy landscape compared with the last time oil and gas rights were sold in Brazil, a promising oil frontier where production has nonetheless fallen in recent years as the government halted sales of new blocks and reworked the rules for its most promising reserves.

For starters, the world appears to have more oil than investors believed five years go. A shale-oil boom in the US - and increasingly successful efforts to extract once hard-to-reach oil in Canada, Venezuela and elsewhere — mean that bidders no longer see an industry defined by dwindling supply.

And Brazil has startled many investors since the huge reserves near Rio were discovered. Seeking greater control over future concessions, and a greater share of oil produced in the so-called subsalt region where the big new discoveries lie, the government upended a regulatory model that had proven popular with foreign investors since the 1990s.

Still, the potential for profit appears to be motivating bidders, many of whom are used to operating in countries far less investor-friendly than Brazil. In addition to whatever upside the blocks on auction this week offer, many investors are eager to gain or increase exposure in a country that could still boast vast undiscovered reserves.

“The size of the prize in the country is really too big for companies to ignore,” said Ruaraidh Montgomery, a Latin America analyst for energy consultancy Wood Mackenzie. “The opportunity’s just too great.”

Investors are being selective, though. While they bid fiercely for the offshore Amazon blocks, located in promising deepwater fields, the regulator said bidders showed little interest in more speculative blocks. Only two companies, for instance, made bids for three of 26 blocks offered in shallow water closer to shore in the same basin.

Brazil’s government said it expects to raise more than 1bn reais from the sale — or possibly twice as much as the 628mn reais in minimum bids set for the auction.
Brazilian companies are taking part despite production delays and sluggish development of new fields. Petrobras, as the state-run company is known, in the second quarter of 2012 posted its first quarterly loss since 1999 and this year has struggled to ramp up output.
OGX, meanwhile, has lost nearly 90% of its market value after the company failed to meet initial production targets.

Other registered foreign bidders include BG Group, Chevron, ExxonMobil, Royal Dutch Shell, Norway’s Statoil, Spain’s Repsol, China’s CNOOC, Australia’s BHP Billiton and Angola’s Sonangol.

Most blocks being sold are in frontier regions, or underexplored areas with little or no existing oil or gas output.

The blocks, mostly in north and northeast Brazil, have been broken into four onshore and seven offshore zones across 11 sedimentary basins. In addition to the Foz do Amazonas and Parnaiba basins, another area likely to attract heavy interest is the offshore blocks in the Ceara basin, off the coast near the northeastern city of Fortaleza.

Like the rest of Brazil’s offshore oil bounty, geologists believe the blocks could mirror deep subsea oil deposits off the west coast of Africa. The deposits, scientists say, were formed over millions of years as biological matter settled in sediments deep in the rift between South America and Africa as the two continents, once contiguous, drifted apart.

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