ExxonMobil, Anglo-Dutch Shell and Chinese Cnooc will be among 17 operators to bid for Brazilian oil deposits in a public Rio de Janeiro auction which begins today. The companies will be competing to develop four oilfields off Brazil’s south-east coast estimated to contain about 15 billion barrels of crude oil.
The energy companies will submit their offers in sealed envelopes at the public event in Rio and the signing bonuses they will need to pay to Brasília will total as much as $26.4bn.
The deep-sea oil project is part of the Brazilian Government’s efforts to transform Brazil’s offshore industry and help the country join the list of the biggest oil producers like the US, Saudi Arabia and Russia. In addition, based on demand from previous auctions, officials estimate the offshore fields at Buzios, Itapu, Sepia and Atapu will generate more than 400,000 jobs in Brazil.
Brazilian minister of finance Paulo Guedes said: “We will transform this physical and fossil capital into human capital. In 20, 30, 40 years, we will transform all this untapped wealth into human capital, into health and education for the Brazilian worker.”
The oil industry growth is expected to grant Brazil with $25bn in licensing fees and tens of billions more in production compensation. By the 2030s, the development of the offshore sites is predicted to raise Brazil’s daily oil production from 3 million to 7 million barrels a day, an increase that would position the country as the world’s fourth-largest producer, compared to currently being the ninth largest.
This week’s auction, which is expected to be the largest oil bidding process in history, comes at a time when offshore companies fall under substantial scrutiny as countries are looking to cut down carbon emissions and switch to renewables. Despite that, Brazil took on the ambition led by its new president Bolsonaro to maximise the country’s exploration of natural resources and boost the oil and gas sectors by diversifying operators.
ExxonMobil and Shell were also listed on a Guardian report which recently showed that 17 of the top 20 companies, whose activities accounted for one-third of the current greenhouse gas emissions, are oil companies.
As part of its last year sustainability report ExxonMobil chairman and CEO Darren Woods said:
“At ExxonMobil, we work extensively to reduce emissions and other environmental impacts of energy use in our operations and through the products we sell.
“We’re also a leader in researching and developing energy technologies, like algae biofuels and carbon capture, utilization and storage, that could potentially play a role in helping mitigate the risks of climate change,” he added.