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Share Price: 496.95
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UPDATE 3-Brazil raises $2.2 bln in oil auction; Total, Petronas invest big

Thu, 10th Oct 2019 13:13

(Adds Total statement, info on unsuccessful bidders)

By Gram Slattery and Marta Nogueira

RIO DE JANEIRO, Oct 10 (Reuters) - Ten companies on Thursday
agreed to pay more than $2 billion for the exploration and
production rights in 12 offshore oil blocks in Brazil, in what
could be a promising sign for even bigger upcoming oil auctions.

The most heavily sought after areas in the Thursday auction
directly border Brazil's so-called pre-salt area, a coveted zone
in which billions of barrels of oil are trapped under a thick
layer of salt beneath the ocean floor.

Pre-salt blocks will be up for grabs in two much larger
auctions scheduled for Nov. 6 and Nov. 7, including the
so-called transfer-of-rights auction, which is expected to fetch
around $25 billion for the government.

On Thursday, companies agreed to pay the Brazilian
government 8.9 billion reais ($2.2 billion) in signing bonuses.

The biggest move came from a France's Total SA,
which, in a consortium with Malaysia's Petronas and Qatar
Petroleum, dropped 4.029 billion reais for one block abutting
the pre-salt area. Total will be the operator, with a 40% stake.
Those areas, known as "fringe blocks," are believed to share
some geology with the pre-salt area.

After the auction, Mines and Energy Minister Bento
Albuquerque said the results were "well above expectations,"
pointing out that minimum signing bonus for all areas together
combined was just 3.2 billion reais.

Other significant winning bids included a bid of 1.116
billion reais by Petronas for a block in the Campos Basin, and a
2.045 billion reais bid from Brazil's Petrobras and
BP Plc for a separate block.

Petronas made another significant move into Brazil in April,
when it purchased two oilfields from state-run Petrobras for
$1.29 billion.

Royal Dutch Shell Plc, Wintershall Dea GmbH,
Chevron Corp, Exxon Mobil Corp and Repsol SA
also won at least minority stakes in exploration
blocks.

Twenty-four blocks, many in more marginal oil producing
areas, failed to attract a bidder and will be placed in a new
program the Brazilian government calls "permanent offer."

Seven blocks near the ecologically sensitive Abrolhos
archipelago in northeastern Brazil received no bids, after
environmental litigation involving federal prosecutors was
disclosed on Wednesday.

In a statement following results, Total said that while it
was committed to pursuing deepwater opportunities in Brazil, in
would not join other oil majors in participating in the
transfer-of-rights round as the competitive process was geared
toward non-operating stakes.

In addition to the t10 companies that made successful bids
in oil blocks, Norway's Equinor ASA made one
unsuccessful bid.

Six companies - Murphy Oil Corp, Enauta Partipacoes
SA, Karoon Energy Ltd, Petrogal, Ecopetrol
SA and China National Offshore Oil Corp Ltd -
registered for the auction but did not place offers.

(Reporting by Gram Slattery and Marta Nogueira; additional
reporting by Rodrigo Viga Gaier; editing by Richard Pullin and
Steve Orlofsky)

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