The ANP (National Agency for Petroleum, Natural Gas and Biofuels) will hold this Friday (Dec.16, 2022) the auction of the 1st Cycle of the Permanent Offer for Production Sharing in pre-salt areas. In all, 11 blocks will be offered: 4 in the Campos Basin and 7 in the Santos Basin. The collection could reach R$ 1.28 billion in signing bonuses.
Some of the blocks have already been auctioned previously, but did not receive bids. Auction information is contained in the public notice released by the ANP. Here’s the full (7 MB).
Here are the blocks that will be auctioned:
In all, 9 companies are eligible to participate in the event. In note, the ANP informed that Petrobras expressed, in February, its interest in the preemptive right in the Água Marinha and Norte de Brava blocks. This means that, if another company buys these blocks, the state-owned company will receive a stake in the exploration and production of the area.
BIDDING ON THE SHARING REGIME
In the sharing regime, the company that submits the most advantageous proposal, according to the auction criteria, wins the bid. The bidding notice establishes a minimum percentage of excess oil, based on which companies make their bids.
The oil surplus is the portion of oil and/or natural gas production to be shared between the Union and the contracted company. It results from the difference between the total volume of production and the shares relating to royalties owed and the cost in oil (portion of production corresponding to the company’s costs and investments in operating the field).
In the concession regime, on the contrary, the company owns all the oil and/or natural gas it produces.
Another difference is that, in the sharing regime, the signature bonuses (amount paid in cash by the companies that acquire areas in the bidding process) are fixed and determined in the notice. Thus, before signing the contracts, the winning companies must pay the Union the value of the bonuses corresponding to the areas acquired by them in the round. In the concession, a minimum value is stipulated.
WHAT IS PERMANENT OFFER
The Permanent Offer is today the main modality for bidding areas for exploration and production of oil and natural gas in Brazil. In this format, there is a continuous offer of exploratory blocks and areas with marginal accumulations located in any onshore or offshore basins.
In this way, companies do not need to wait for a bidding round to buy a block or area with marginal accumulation, as they are permanently on offer. In addition, companies have as much time as they deem necessary to study the technical data of these areas before making an offer, without having to meet the deadline of the round notice.
Once your application for the Permanent Offer is approved, the company can declare interest in one or more of the blocks and areas offered. After approval by the CEL (Special Bidding Committee) of one or more declarations of interest, a cycle of the Permanent Offer begins.
The cycles correspond to the holding of public sessions for the presentation of bids for one or more sectors that had a declaration of interest. On the day of the public session, registered companies can make bids for blocks and areas with marginal accumulations in the sectors being auctioned in that cycle.
OFFERS
There have already been 3 cycles of the Permanent Offer under the concession regime. The investments proposed in the 1st Cycle, made in 2019, exceeded BRL 320 million. In the 2nd cycle, in 2020, and in the 3rd cycle, in 2022, the proposed investments exceeded R$ 160 million and R$ 406 million, respectively.
The collection of signing bonuses as a result of the signing of contracts signed under the Permanent Concession Offer modality exceeded R$ 500 million, with the amounts of R$ 79 million collected between the years 2019 and 2021 and R$ 422, 21 million in 2022.
Until December 2021, the Permanent Offer was carried out exclusively under contracting by concession.
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