The Transfer of Rights (TOR) is a presalt area in the Santos Basin originally awarded to Petrobras in 2010. To date the latest appraised estimate reported by the hydrocarbon’s agency ANP considers 5 to 15 billion barrels of oil equivalent (boe) of additional resource in the TOR blocks. Due to both the change in oil price since 2010 and now the additional resource identified, Petrobras and the government have been trying to reach an agreement on the current monetary value of the resource and adjust the original deal. Also, the government now has an interest in auctioning the additional resources with the expectation of generating higher than normal bids and signature bonuses that can help the budgetary balances of the government.

Given the lower risk involved in this already appraised area and the high productivities of presalt wells, the government’s expectation is for a related auction to generate at least $26bn in revenue. Currently there are 14 projects within the TOR blocks which are being developed, out of which 4 are producing and 10 are planned. In spite of the high upfront capital expenditure required, these projects have favourable economics as a result of their expected high well productivities and their high recoverable reserves volumes.

Projects comparison

Source: GlobalData Analytics                                                                                                                                                                              © GlobalData

A bidding round to auction TOR related blocks will be more in line with a farm out of assets for development given their low to non-existent exploratory risk. This aligns well not only with any budgetary needs of the government but also with Petrobras’ strategy for partnering and divesting assets to cope with its remaining debt of $73bn. During the last 2 years presalt bidding rounds fourth and fifth have generated $4.6bn offering blocks with much less prospectivity when compared to the TOR blocks.

Given the investment already carried out by Petrobras in some of the TOR projects it makes sense to expect high interest and bids from investors. Indeed the presalt resource in offshore Brazil is an established game changer that survived political and economic upheavals of the country, it supports long term strategies of major oil and gas companies and Brazil’s government goal of becoming a top oil exporting country.

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