The ANP, Brazil’s national agency for petroleum, is seeking to increase the diversity of international operators present in Brazil. It is hoped this will provide the upstream oil and gas sector more resilience at a time when Petrobras has limited investment resources.

The ANP appears confident that the fiscal terms relating to the upcoming 2019 rounds will attract international oil companies (IOCs). Large resources, hydrocarbon quality, and low lifting costs make it an attractive opportunity for these businesses.

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The Pre-Salt region is under production sharing agreements (PSAs), and will provide the majority of future oil production. However, operatorship opportunities and/or large PSA shares for the region may be time limited for the IOCs.   

The 2019 rounds        

Brazil is organising three oil and gas rounds between October and November 2019. Yet despite IOCs’ interest, it might be economically counterproductive to have the rounds in such a short period of time. The ANP now plans three annual licensing rounds ─ one for PSAs in the prolific Pre-Salt region, one for concessions, and the permanent offer round. Additionally, 2019 brings the Transfer of Rights PSA Round, offering the excess discovered Pre-Salt volumes. These were previously assigned to Petrobras in 2010.

There is a risk in organising three licensing rounds in less than two months in 2019. Bidders will need to evaluate a number of high potential opportunities in a relatively limited time frame. For the Transfer of Rights PSA Round, the ANP only published the tender and PSA model in mid-June, so companies have less than five months before bidding.

The new two PSA rounds are expected to increase the number of operator IOCs in a key growth area. For concessions, the legislation has always permitted the award of blocks and the operatorship to companies other than Petrobras. 

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Oil Production According to All the Companies Producing in Brazil

 

In addition, the Resolution No. 785 introduced in May 2019 amended the procedures for sale of oil and gas fields.

This law aims to encourage the entry of new players for mature fields.  The logic behind the resolution, providing an enlarged version of reserve-based lending, is to increase the number of oil and gas companies. As a result, mature-phase projects would benefit by the entrance of new licensees’ best positioned to develop them.