November 05, 2019

Upstream Extra: Bidding Scheduled for November 6th on 15 Billion Barrels in Brazil

Stratas Advisors

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Brazil is conducting its largest oil and gas auction to date with a Transfer of Rights (TOR) auction covering four offshore blocks in the Santos Basin. The assets, the Buzios, Itapu, Atapu, and Sepia have combined estimated reserves of 15 billion barrels, all proven. These blocks are all located in the southeastern area of the Santos Basin. Recent announcements indicate 14 operators are registered to participate in the auction process.

Auction protocols grant Petrobras preferential rights with minimum participating interest of 30% in the Buzios Block. Petrobras could raise its interest at the auction on November 6th. Buzios is the largest of the four blocks offered and is considered the crown jewel in this offering. The block currently has four platforms, each capable of handling 150,000 barrels per day of oil and seven million cubic meters of natural gas per day. Plans are in place for a fifth platform by 2022. 

At Itapu, Petrobras exercised its rights for 30% interest. Itapu is planned to be operational in 2023 with an FPSO having 120,000 barrels per day of crude oil capacity and 3 million cubic meters per day for natural gas.

Notably, Petrobras waived its rights for Atapu. First production at Atapu is planned for next year. Notably, the field is unitized with two other Petrobras operated fields nearby, the Barbigao and the Sururu. At Sepia, first production is expected in 2021.

The remaining calendar for the TOR process includes awarding and ratification of winning bids on November 18th. Finalizing documents and payments are set for Late-December and the execution of the Production Sharing Agreement (PSA) is scheduled for March 31, 2020.

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