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Brazil sub-salt bidding off to brisk start

27 Oct 2017, 3.20 pm GMT

Brazil sub-salt bidding off to brisk start

Rio de Janeiro, 27 October (Argus) — Brazil's sub-salt unitization auction this morning drew winning bids from Shell, Brazil's state-controlled Petrobras, Portugal's Galp, ExxonMobil, Norway's Statoil and Spanish- Chinese Repsol-Sinopec.

A separate auction for new subsalt blocks gets underway this afternoon.

In this morning's session, the Carcara unitization area attracted the most competition, with a consortium comprised of Statoil, Galp and ExxonMobil outbidding Shell for the area.

Estimated to hold around 2.2bn bl of oil in unrisked reserves, the unitized portion was awarded for a fixed signing bonus of R3bn and a profit oil offer of 67.12pc, a margin of 45.12 percentage points above the government minimum. Statoil will hold a 40pc operating stake in the unitized portion, Galp 20pc and ExxonMobil 40pc.

Statoil holds a 76pc operating stake in the BM-S-8 block where Carcara is located, 66pc of which was acquired from Petrobras in a $2.5bn acquisition earlier this year.

Galp holds a 14pc working interest and Brazilian independent Barra Energia the remaining 10pc.

Petrobras, Repsol-Sinopec and Shell were awarded the unitization portion of the 260,000 b/d Sapinhoa field with a profit oil offer of 80pc, almost 70pc percentage points more than the government minimum of 10.34pc, and a signing bonus of R200mn.

Petrobras and Brazilian independent Ouro Preto offered the only other bid for Sapinhoa, with a profit oil offer of 21.17pc.

The winning companies retained the existing consortium breakdown, with Petrobras holding a 45pc operating stake in the sub-salt overhang, which is estimated to hold unrisked reserves of 350mn bl of oil. Repsol-Sinopec will hold a 25pc interest and Shell the remaining 30pc.

Shell and French partner Total went unchallenged for the sub-salt reservoir portion of the Gato do Mato field. The partners offered the minimum 11.53pc profit oil and R100mn signing bonus for the field, which is estimated to hold unrisked reserves of the 200mn bl oil equivalent.

The Tartaruga Verde block did not receive any bids. Petrobras holds the producing portion.

This morning's auction, known as the second sub-salt round, was delayed by a couple of hours because of a late-night court injunction requested by a labor union. As expected, the injunction was overturned.

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