ANP to double block offerings for explorers (Upstream)

Fabio Palmigiani
2 Feb 2018 

The Brazilian National Petroleum Agency (ANP) expects to more than double the number of exploration blocks to be made available on an ongoing basis as part of its permanent offer initiative by the end of the year, writes Fabio Palmigiani.

The regulator has initially selected 846 blocks spread across 13 sedimentary basins that were either not acquired by oil companies in previous licensing rounds or have been relinquished.

These include offshore permits in the Campos and Santos basins outside the pre-salt polygon, acreage in the Sergipe-Alagoas and Para-Maranhao basins, as well as hundreds of onshore tracts in frontier plays and mature regions.

“In April, we will announce the rules and technical-economical parameters associated with the permanent offer, so that in May companies will start making offers,” said ANP director general Decio Oddone.

However, he explained that the first blocks will likely only be awarded to oil companies in November, after the country’s presidential elections scheduled for October.

“By law, we cannot promote events such as oil rounds 90 days prior to the elections, so we are going to respect that period,” Oddone told reporters in Rio de Janeiro.

“Our goal is to double the number of blocks after the elections to about 2000, and then we will start to see the dynamics of the permanent offer initiative. We have a lot more blocks to be offered than the 846 areas included in the first wave.”

According to Oddone, some of the exploration blocks that will begin to be offered to investors in May are close to producing fields that are included in Petrobras’ divestment programme.

“I think the permanent offer will be revolutionary to Brazil, because it will be the main driver to add acreage and allow companies to analyse blocks continuously,” he said.

“The idea is to create for the first time an environment to attract more international players to Brazil and even foster the creation of small and mid-sized local oil and gas companies.”

Oddone believes that one of the main reasons there are so very few operators in Brazil is that before the creation of the bid round calendar and the permanent offer, the country was solely relying on a single auction on an annual basis.

“The previous model was developed by presenting blocks to potential investors just four or six months before the organisation of each licensing round, and that created a barrier for new companies to enter Brazil, as they did not have enough time to properly prepare themselves,” Oddone said.

In a bid to attract even more investments, Oddone said the ANP is presently working on plans for a reduction of royalty rates to 5% from 10% for marginal and mature fields, and the extension of concession contracts signed two decades ago in the so-called Round Zero.

Oddone said: “We are looking at dozens of contracts, mostly from Petrobras, which are due to expire in 2025, and we are considering renewing them for another 27 years, provided the company submits a new development plan and commits to new investments.”

The ANP has so far granted extensions to the deep-water Marlim and Voador fields in the Campos basin, as well as the shallow-water Ubarana field in the Potiguar basin and the onshore Aracas field in the Reconcavo basin.

http://www.upstreamonline.com/hardcopy/1422786/anp-to-double-block-offerings-for-explorers

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