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OTC 2015: Brazil to hold 13th bidding round in October: energy minister

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OTC 2015: Brazil to hold 13th bidding round in October: energy minister


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Houston — Brazil will hold its 13th bidding round in October, highlighting both onshore and offshore blocks, mature, new frontier areas and high-potential basins, energy minister Eduardo Braga said Monday.

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In all, 269 blocks will be on offer, Braga said during a presentation at the Offshore Technology Conference in Houston.

"The most important area is Sergipe-Alagoas -- an area close to it," Braga said. "We're waiting for the [final] results of environmental studies in the state of Amazonas."

The country also hopes to establish a second round of subsalt acreage in 2016-2017, based on the production-sharing model.

Brazil's national petroleum agency, or ANP, will offer 10 blocks in the basin, as well as four blocks in the nearby Jacuipe Basin and 51 blocks in the Pelotas Basin.

Uruguay also recently held successful sales of exploration concessions to the south of Pelotas, which Braga has indicated holds "good potential" for oil and natural gas discoveries.

During a press conference after his presentation, Braga could not say to what extent Brazil's state-led Petrobras could play a role in the upcoming bidding round, given its woes from an ongoing corruption investigation.

"Who knows? We can only hope" the company will be active, Braga said.

Petrobras last month said it would slash investments and focus its exploration portfolio on low-risk assets, developing its most promising prospects at home.

Brazil's 13th round auction of exploration and production concessions will be the country's first since November 2013.

The country also will review local content rules, but probably will not make any adjustments for the October bidding round, Braga said.

Concession contracts currently include strict requirement to use a certain percentage of locally produced goods and services, which aims to create a robust oil field services sector. But the measure has instead driven up costs and resulted in delays because of bottlenecks at suppliers and shipyards.

Any adjustments to the rules would likely occur in the second subsalt round, Braga said.

He said currently about 30,000 workers are involved in Brazil's oil industry related to its local content rules.

"I think we're doing quite well, but as you know we're facing that matter of corruption which means we're in deep debate right now in Brazil about that," Braga said.

Local content "is very important" for Brazil, he said, adding about $50 billion/year is spent on it.

Petrobras and a joint-venture firm controlled by Indian firms Bharat Petroleum Corp. and Videocon Industries Ltd. has made a series of deep-water offshore discoveries in the Sergipe-Alagoas Basin. Petrobras expects to install the first of two 100,000 b/d production systems in the area by 2018.

Recent drilling success by Australia's Karoon Gas in the southern Santos Basin, meanwhile, could generate interest three sectors being considered in the Pelotas Basin. Karoon said that the Echidna-1 well found a 213 meter column of oil that further confirms the potential of the Kangaroo discovery. The region containing Kangaroo lies to the north of the Pelotas Basin.

--Starr Spencer,
--Jeff Fick,
--Edited by Richard Rubin,