Brazil’s government cheered a nearly US$2 billion payday from the auction on Friday of its deep-water oilfields in a sale that brought the world’s energy giants into previously restricted territory.
The auction — delayed by a late court injunction backed by the Brazilian Workers’ Party, which led the government until last year — saw six of eight so-called pre-salt blocks in Brazil’s offshore Atlantic region find buyers.
The government racked up 6.15 billion real (US$1.9 billion) in signing bonuses and the promise of far more.
“Brazil is back on the world oil scene,” said Decio Oddone, head of the Brazilian National Petroleum Agency, which oversaw the auction.
Winners were determined according to the percentage of profit oil pledged to the government in production-sharing agreements.
Signing bonuses fell beneath the potential 7.15 billion real if all blocks had been sold. However, the government still came out in front, because consortiums including Royal Dutch Shell PLC, Exxon Mobil Corp and Statoil ASA pledged bigger production percentages than expected.
In one block, won by a consortium of Brazil’s Petrobras, Repsol SA and Shell, the agreed government share of profit oil was 80 percent — far greater than the minimum 20 percent requirement.
“I was really surprised by the [percentages] .... I was very satisfied. It’s good to see the market’s appetite,” Oddone said. “Brazil has returned to the oil and gas exploration stage in style.”
Brazilian President Michel Temer called the auction “an excellent result” and forecast that the winning consortiums would ultimately generate “around US$130 billion in royalties and other sources of receipts.”
The pre-salt fields, which are called that because the oil lies in ultra-deep waters and below thick beds of salt, hold the promise of billions of barrels of oil. However, they come with the challenge of operating in the deep Atlantic, as well as that of the depressed state of global oil markets.
Temer’s scandal-plagued, center-right government has made bringing foreign investors into the strategic sector a priority, in hopes of lifting Brazil out of a long recession.
Sixteen companies were accredited for the auction. The big sale started more than two hours late as the government battled the last-ditch injunction.
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