U.S. firms dominate Brazilian E&D bidding round

U.S. companies are leading the pack in the first bidding round for concessions to companies seeking to explore and develop oil and gas fields in Brazil, said David Zylbersztajn, executive director of Brazil's National Petroleum Agency (ANP).

While no companies have been identified yet, countries represented by prospective bidders are: the U.S., 18 firms; Brazil and the U.K., 5 each; Argentina, Canada, and France, 2 each; and Chile, Germany, Japan, the Netherlands, South Korea, and Spain, 1 each.

ANP sold $9.7 million worth of information packages providing full geological data acquired on the 27 blocks that are to be auctioned on June 16 or 17. Concession agreements will be signed in July.

Last year, in accordance to a deregulation law passed in Congress in 1997, ANP divided Brazil's sedimentary basins into areas that would remain with state oil firm Petrobras and those that would be put out for international tender by ANP.

"We expect around $15 billion worth of foreign investments in the petroleum sector within the next 4 years, which will place Brazil as a major player in the international oil market," said Zylbersztajn.

Sale details

In awarding concessions, ANP will award 85 percentage points to the highest bid, and the remaining 15 points will depend on the bidder's commitment to use Brazilian goods and services.

The duration of the concession term will depend on the winning group or company's fulfillment of exploration work stages (4-9 years, depending on the block), and on the production stage, in the case of a commercial discovery. From then on, concession agreements will be valid for 30 years, with an option to extend, should the area remain productive.

At the end of each stage, concessionaires will relinquish all undeveloped areas in their blocks to ANP and retain only those where oil and gas have been discovered. Concessions for these undeveloped areas may be re-auctioned in the future.

The blocks being auctioned by ANP are of different sizes and present a variety of opportunities. They include deepwater blocks bordering known oil fields, mature basins, and natural gas prospects in shallow waters. Altogether, they cover about 4,500 sq km, equivalent to about 225 blocks in the U.S. Gulf of Mexico, Zylbersztajn said.