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Oil At A Crossroads As COVID-19 Infections Surge

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Soaring U.S. crude inventories and…

Brazil Eyes A $1.45 Billion Payday As Big Oil Flocks To Pre-Salt

Brazil expects to pocket some $1.45 billion (6 billion reias) from the sixth round of oil and gas block licensing for the pre-salt zone offshore.

Reuters reports, citing the special secretary to the Economy Ministry, Waldery Rodriguez, that the total minimum sum of signing bonuses for all the blocks that will be tendered on November 7th is $1.9 billion (7.85 billion reias). However, there is no certainty that all the blocks will end up with a suitor.

Interest is strong. The auction will offer an area in the pre-salt zone that contains an estimated 15 billion barrels of crude. Notorious as the transfer-of-rights area, it had put state energy major Petrobras at odds with the government.

The saga continued for several years until finally, last month, the Brazilian Senate approved a $9-billion payout to Petrobras for the transfer of rights over the offshore area, which put an end to the long-running dispute. Initially, there were reports that Petrobras could get as much as $14 billion from the government to settle the dispute, but eventually the sum was lowered to $9 billion.

Related: Is Iran Considering An Attack On Saudi Arabia?

Supermajors are already active in Brazil’s pre-salt zone, among them Shell, Equinor, Total, Exxon, and Chevron.

The Norwegian state oil company is developing the Carcara field—part of the prolific Santos Basin. Shell is a strategic partner of Petrobras in the pre-salt zone, holding minority interests in the Libra and Lula fields and in other areas such as Sapinhoá, Lapa, and Iara, all of which are located in the Santos Basin. Total is the partner of Shell, Petrobras, and CNPC in the Libra field, also in the Santos Basin, and is considered one of the biggest offshore discoveries in the Brazilian pre-salt zone.

If the TOR area is developed, it could make Brazil the world’s fifth-largest oil producer and also double its reserves to 30 billion barrels.

By Irina Slav for Oilprice.com

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