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Brazil's 2nd bid round expected to cause fierce bidding
12-01-00 Brazil should have more success wooing the oil industry to its upcoming second exploration tender, with higher international prices and clearer local rules making the offer one of the most attractive in the energy world. Industry experts said they expect fierce bidding this round, despite lukewarm participation at Brazil's inaugural auction in June.
"The international situation is better at this time, so companies are more able to come and Brazil is less risky," said Jean Paul Prates of consultants Expetro in Rio de Janeiro. Rising global oil prices have made companies flush with investment capital at a time when Brazil's regulatory climate has eased, he added.
Nine companies have already picked up the seismic information packages since the National Petroleum Agency (ANP) put them on offer, with seven paying $ 300,000 to buy the entire set of data for all 23 areas on offer.
Actual bidding will start at a date yet to be named in the second quarter of 2000. Brazil sold oil rights to less than half of the 27 blocks on offer at its first-ever tender, with many attracting no bids at all, although the cash offers far exceeded expectations and the ANP won praise for the auction's transparency and smoothness.
This time around, the regulatory agency took pains to make the contract terms even more attractive and offer manageable areas with varied terrain to attract smaller independent firms along with the major oil companies. "With the road shows it became clear that there's a new public interested in the second round, made up of small companies," said Ivan Simoes Filho, the ANP's superintendent for promoting tenders.
Of the 23 blocks to be auctioned in nine sedimentary basins, 13 will be offshore in various depths of water and 10 onshore in mature and little-explored basins. To compensate, the ANP has provided an unusual but well-received "out-clause" on some underdeveloped blocks in the Sergipe-Alagoas, Potiguar and Reconcavo basins. Bidders have a year to look at the territory before committing to anything more than the auction price. They are not obligated to invest in exploration.
"It's a grace period that helps very much. That's a very, very special exception," one expert said. Among the bigger players, there has been some griping that the lots had been broken up too much for the country's expensive-to-explore deep water terrain, while others praise the wide variety on the ANP's menu. "The ANP has been professional and exceeded everyone's expectations. The other real attraction is the assets being offered, which make a good investment in this climate," the head of development at a US oil company told.
One major intrigue in Brazil remains the bidding actions of the giant state-controlled Petrobras, which held complete sway over oil exploration for decades and has a solid reputation in ultra-deep water drilling. Petrobras, which announced a huge oil strike in the Santos basin shortly after the first round auction, surprised industry observers by bidding successfully -- at times against no one else -- for stakes in five blocks, making many suspect the company had privileged information.
Even so, the oil industry in general feels there are great possibilities in Brazil due to its size and large market, as well as its relative stability. Brazil is also seen as fertile ground for development after years of control by one company.
"This country is immense and there's an immense area to be explored. It's been kept like a crystal for years," Prates said. "You can make new approaches that could yield something even in the blocks that Petrobras has been in."
Source: Reuters |
