Earlier this month, ANP concluded in Asia the Road Show of the 1st Round of the Brazilian pre-salt. The upcoming bidding will be ruled by a different type of contract, and has been theme of discussion over the previous months. As the well was drilled by ANP itself, some international companies claim to be unsure of the actual profitability of the contract.
In order to evaluate the well, ANP – the national agency that regulates the O&G industry – drilled what is the largest oil field in the country. In an interview to the TV channel GloboNews, João Carlos de Luca, President of IBP (Brazilian Institute of Petroleum, Gas and Biofuels), said it is a very interesting opportunity for the Brazilian government, since Libra corresponds to a widely big area that has already been evaluated by ANP, meaning more bonus can be charged by IBP. Libra’s depth is approximately 5.000m. The local authorities fear that splitting Libra into several smaller fields could lead to legal conflicts due to, for example, the likelihood of a field spill oil into another.
ANP presented information about Libra in a road show through Singapore, London, Houston, Tokyo and Beijing. The director Magda Chambriard warned potential investors that Libra is a unique opportunity in the world. The estimated volume (8-12 billion boe) and the amount of information available are key factors. Important discoveries in the area have already been made and oil has been produced and analyzed. All data is public and can be accessed on www.brasil-rounds.gov.br.
“This means that investors who participate in the auction will know exactly where is the oil contained in the block and what is its market value,” said Magda.
The sole point in which Chambriard seemed to agree with skeptical foreigner investors is that it may be time to rethink the policy of granting 30 percent exclusive operator rights to Petrobras. There are alleged signs this policy may be changed after 2014 elections, whoever wins. General director of the Strategic Centre for Energy Resources, Jean Paul Prates agrees that changes are expected to happen:
“This is not a real test of the production-sharing model. It is an opportunity for Brazil to raise money and companies to book reserves. It will be different when there is scope for disagreement about exploration risks or attractiveness, and change is likely.”
What somehow changed the scenario of the upcoming bidding were the accusations of espionage by the US government brought to the public by Globo – a TV channel of national reach. Documents on which the US allegedly shows how their security agency spied on Petrobras and Brazilian president Dilma Rousseff made the diplomatic tension between the US and Brazilian authorities grow.
The Brazilian Senate is divided on the possibility of postponing – or even cancelling – the round. This is because of the possibility of American companies benefiting from privileged information when preparing their bids, therewith compromising the budget of the Brazilian government.
According to the rules of the new contract, the consortium willing to have the highest share of oil intended for Brazil wins the bidding.