Oil and Gas

Assignment Auction raises R$69.96bn

Nov, 06, 2019 Posted by Sylvia Schandert

Week 201946

The largest auction ever to be held in the oil industry, the Assignment Surplus Bidding Round (surplus of the volume of oil and gas that the Union ceded to Petrobras) had a collection of R$69.96bn in signature bonuses this morning (11/06). The forecast revenue was up to R$106.5bn, but two of the four blocks did not receive offers from 14 companies eligible to participate.

Even without bidding in two of the four areas, today’s auction had the largest collection in the history of bids promoted by the National Agency of Oil, Natural Gas, and Biofuels (ANP). The signature bonus collection is the largest of all other auctions already held by the regulatory agency added together.

As the blocks awarded received minimum offers, the payment of this bonus should occur later this year, by December 27.

Petrobras

Petrobras’ participation was decisive in the auction, as the state owned the Itapu block alone and formed a consortium with 90% stake to also take the Buzios block, the largest in the auction. Chinese state-owned companies CNODC and CNOOC each had a 5% stake in the consortium, which will pay R$68.19bn of the R$69.96bn obtained with signing bonuses this round.

The two blocks won the minimum bid of excess oil. In the case of pre-salt auctions, the amount to be paid in signature bonuses is fixed as the contracts follow the rules of the Sharing Regime. In these auctions, the bid evaluation criterion is oil surplus, also called profit oil. This means that companies undertake to share with the Brazilian State part of what is extracted from the blocks, and this percentage is calculated only after discounting operating costs and royalties. The winning proposal will be the one in which the Union will have the most participation.

In today’s auction, companies had to offer the Union slices equal to or greater than the following minimum oil-profit percentages: 26.23% in the Atapu block; 23.24% in Buzios; 18.15% in Itapu, and 27.88% in Sepia.

Source: Agência Brasil

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