* 11 firms registered to bid in Brazil's auction on Friday
* Competition expected to be fiercest since 2018
* Seven Latin American nations to hold auctions in 2022-2023
By Marianna Parraga and Sabrina Valle
HOUSTON, Dec 16 (Reuters) - Latin America's oil frontiers
are back in the spotlight with auctions coming up in Brazil,
Guyana and the Andean region that are expected to attract bids
from major oil firms despite a global call to end fossil fuel
development.
Brazil is set to receive bids on Friday for offshore oil
reserves that analysts say are some of the most promising to
ever come to market. In other countries in the region, more
flexible bidding and fiscal terms have piqued the interest of
oil companies after a two-year bidding lull.
Latin America has been the source of some of the largest oil
and gas finds this century, but several governments postponed or
canceled auctions in 2019 and 2020 because of weak oil prices
and falling demand due to the coronavirus pandemic.
Now, the rebound in energy prices this year coupled with a
sense of urgency about getting oil and gas reserves out of the
ground before the world shifts to renewable energy mean
development projects are back on the agenda.
"The last two years have been hard for the region," said
Andres Armijos, the Latin America chief at energy consultancy
Welligence. "There is now the message that time is running out."
The International Energy Agency, whose members are mostly
rich oil-importing nations, said in May that investors should
not fund https://reut.rs/3yu1vwe any new oil and gas projects if
they want to achieve net zero emissions by 2050.
"Companies are undoubtedly being more selective," Rodolfo
Saboia, the head of Brazil's oil regulator, told Reuters, saying
many firms wanted to develop projects that could deliver returns
fast, rather than the mega oil ventures of old.
Altogether, seven Latin American countries are looking to
secure additional investment over the next two years by offering
new blocks, and pushing legal and tax reforms that could give
producers larger and faster returns.
Welligence Vice President Andre Fagundes said the region's
improved development terms would remain key for luring bidders.
ONLY FOR BIG PLAYERS
Eleven companies including Exxon Mobil Corp, Royal
Dutch Shell and Equinor have signed up to
participate in Brazil's auction on Friday.
The government expects to collect almost $2 billion in
licensing fees and a portion of production.
In 2022, Brazil plans to strengthen its auctions by adding
the coveted offshore pre-salt oil areas where most of its crude
now comes from to an existing system that permanently offers
numerous blocks.
Still, analysts said companies may have to pick and chose
among Brazil, Suriname and Guyana for offshore oilfields - some
of which are up for auction for the first time - due to the high
levels of investment required.
An Exxon-led consortium has found 10 billion barrels of
recoverable oil and gas off Guyana, and there could be double
that in the basin that extends to Suriname, Exxon Senior Vice
President of Exploration and New Ventures Mike Cousins said last
week at a Houston energy conference.
"There will be competition among countries, but each one has
its virtues," said Brazil's Saboia. "The energy transition will
take time and companies want to secure supply in the meantime."
BUOYANT COMPETITION
Colombia kicked off the new auction wave earlier this year
with its 2021 Round, which was a surprise success https://reut.rs/3dT0JQ2.
It received bids in December for 30 onshore and offshore
blocks, which is expected to move it one step closer to energy
self-sufficiency.
"Since the price crash of 2002-2003, Colombia has made
regulatory reforms, created the ANH (National Hydrocarbons
Agency) and introduced new contract models. 660 contracts have
been signed since then," ANH President Armando Zamora said at
the World Petroleum Congress (WPC) last week.
Days after Colombia accepted the bids, Trinidad and Tobago
offered 17 deepwater blocks and announced two more oil auctions
for exploration and production rights would be held next year in
for onshore https://reut.rs/3dWt1t2 and shallow water areas.
Over the next two years, Ecuador will hold also a series of
auctions https://reut.rs/3GNfccK to allocate oil blocks and look
for a private operator for the nation's largest state-owned
refinery, hoping to land $19 billion in investments and to boost
oil output.
On the table in Ecuador will be three offshore blocks in the
Gulf of Guayaquil including the vast Amistad gas field; the
mature Sacha oilfield; and another five onshore areas - as well
as the second phase of the Intracampos onshore oil round.
Peru, meanwhile, is drafting legislation to revamp its
royalty model https://reut.rs/3yAbXST for the oil industry and
regulate the influence of energy projects over communities,
which have created obstacles for foreign investment and oil
rounds.
"Peru is getting ready to offer a round of contracts in the
north for oil and gas exploration and production," Energy
Minister Eduardo Gonzalez said at the WPC.
The country also is planning to ramp up production in the
prolific natural gas regions of Camisea in the Amazon Rainforest
and Aguaytia, following projects for new distribution lines.
(Reporting by Marianna Parraga and Sabrina Valle in Houston;
Additional reporting by Alexandra Valencia in Quito and Marcelo
Rochabrun in Lima; Editing by David Clarke)
