Brazil Oil Flop Continues for Second Day as Majors Abstain
Brazil Oil Flop Continues for Second Day as Majors Abstain
(Bloomberg) -- For the second day, state-controlled energy giant Petrobras led the sole bid as major foreign producers sat out an auction of Brazilian oil deposits.
Petroleo Brasileiro SA, as the company is also called, made a successful joint bid with China National Oil & Gas Exploration & Development Co. for the Aram block in Thursday’s sale at the minimum price. The four other blocks in the auction in Rio de Janeiro received no bids.
The disappointing results follow an auction on Wednesday where the likes of Exxon Mobil Corp. failed to make a bid, despite expressing interest in the process beforehand, leaving Petrobras and its Chinese partners to scoop up two of the four deposits on offer at the minimum price.
The auctions of the so-called pre-salt blocks are a setback for the Jair Bolsonaro administration, which is looking to stimulate competition and reduce Petrobras’s dominance of the Brazilian oil industry. Petrobras will have to cover 90% of development costs for the giant Buzios field that was sold on Wednesday, the most expensive block ever sold by Brazil.
“Things go from bad to worse in Brazil,” Welligence Energy Analytics said in an emailed statement. “The days of chasing pre-salt exploration acreage at any cost are over.”
Thursday’s auction is the fourth this year. Brazil will now enter a phase of massive investment in the areas sold in recent years. The deposits are expected to make Brazil a top five oil producer, according to Decio Oddonne, the head of Brazil’s National Hydrocarbons Agency, or ANP.
“We won’t be licensing pre-salt blocks forever,” he told reporters ahead of the latest auction. “This phase of billionaire blocks has come to a close.”
To contact the reporters on this story: Sabrina Valle in Rio de Janeiro at svalle@bloomberg.net;Peter Millard in Rio de Janeiro at pmillard1@bloomberg.net;Luiza Ferraz in Rio de Janeiro at lferraz9@bloomberg.net
To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net, Christine Buurma
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