Majors snap up more Brazil blocks

ExxonMobil, Shell and BP were the big winners in a swift upstream auction for three pre-salt blocks and one post-salt in prolific offshore Brazil.

Shell and consortium partner Chevron outbid ExxonMobil and Qatar's QPI for the Saturno pre-salt block, the biggest area on offer with around 8.3bn bl of unrisked oil reserves. The consortium offered 70.20pc of profit oil to the federal government, the deciding factor in production-sharing offers. The minimum for the field had been set at 17.54pc. The signing bonus for the block was fixed at R3.125bn.

Shell is Brazil's biggest producer after state-controlled Petrobras with stakes in the country's biggest pre-salt exploration and production blocks.

Chevron re-entered Brazil's deepwater play after years on the sidelines following a 2011-12 oil seepage in the offshore Frade field.

ExxonMobil partnered with Colombia's state-controlled Ecopetrol for the Titã pre-salt block, estimated to hold around 3.9bn bl of unrisked reserves. The consortium offered 23.49pc of profit oil to the government, compared with a minimum of 9.53pc, with a fixed signing bonus of R3.125bn.

ExxonMobil has been one of the most aggressive upstream bidders in Brazil following a series of industry reforms. Ecopetrol has been monitoring Brazil's deepwater patch for years, and finally grabbed a spot on the pre-salt map.

Saturno and Titã, two areas within the geographic designation known as the pre-salt polygon, were recently unitized with two Santos basin blocks, S-M-534 and S-M-645, outside the polygon. Areas in the polygon are governed by production-sharing terms, while areas outside are governed by the industry-preferred concession model.

S-M-534 and S-M-645 had originally been included in Brazil's 15th concession model round in March, but were removed at the last minute amid debates over which contract model should govern the assets.

BP partnered with Ecopetrol and China's state-owned CNOOC for the Pau Brasil pre-salt block, estimated to hold around 3.9bn bl of unrisked oil reserves. The consortium offered 63.79pc of profit oil, versus a minimum of 24.82pc, with a fixed signing bonus R500mn.

BP has been active in all of Brazil's recent upstream auctions, partnering with Petrobras and Norway´s Equinor in pre and post-salt projects.

Petrobras went unchallenged for the Sudoeste de Tartaruga Verde post-salt block in the Campos basin, estimated to hold around 1.29bn bl of 27° API crude.

The company is the sole owner of an interconnected field, Tartaruga Verde, but is in the process of selling a 50pc working interest. Petrobras started production at Tartaruga Verde in June.

The company offered the minimum profit oil of 10.01pc with a fixed signing bonus of R70mn.

The bidding round, the second pre-salt offer this year and the fifth upstream licensing round since 2017, was seen as a last opportunity to pick up assets before the next administration, to be decided in general elections next month, potentially halts or rolls back industry reforms.