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Exxon Snaps Up 8 Brazil Offshore Blocks

Brazil offshore

ExxonMobil snapped up eight offshore exploration blocks in the latest Brazilian bid round on Thursday, leading Big Oil’s aggressive move on acreage next to the coveted pre-salt layer that resulted in a record-high signature bonus proceeds for the government, as oil majors were eager to get into the area ahead of presidential elections later this year.

Some experts had expected that this auction and one under production sharing contracts (PSCs) scheduled for June could attract higher-than-usual bids because Brazil is holding a wide-open presidential election in October.

The most likely leftist candidate, Ciro Ferreira Gomes, has said that he would expropriate oil assets bought by private companies if he won the election.

Of the acreage that Exxon won on Thursday, the U.S. supermajor will operate six of the eight awarded blocks. The blocks extend the company’s acreage in Brazil to more than two million net acres, making it one of the largest acreage holders among international companies in Brazil.

“This acreage in Brazil’s pre-salt play will provide excellent opportunities to deploy our deepwater expertise,” Steve Greenlee, president of ExxonMobil Exploration Company, said.

One of the blocks, in which ExxonMobil will have 40 percent and will be operator, Campos SC-AP5 C-M-789, had the biggest signature bonus offered for one block – US$853 million (2.82 billion Brazilian Real), Brazil’s oil regulator ANP said. This 15th bidding round raised the largest proceeds for Brazil ever in this kind of concession bidding rounds—US$2.42 billion (8 billion Real).

Related: Mexico May Have Just Held Its Last Oil Auction

Apart from Exxon and the Brazilian government, the other big winners in the auction were Statoil and Shell that already have acreage offshore Brazil and were aiming to further expand their positions. Statoil partnered with Exxon for two of the four blocks it gained access to, and with BP for the other two blocks.

“This award is in line with Statoil’s exploration strategy to build on core positions in prolific and proven basins,” said Tim Dodson, executive vice president for Exploration at Statoil.

Shell, for its part, secured one exploration block on its own, and three in joint bids with Chevron, Petrobras, and Petrogal Brasil. Shell will operate two of the four awarded blocks, bringing its total operated presence offshore Brazil to 18 blocks.

“This bid round offers significant potential for additional deep-water discoveries,” Andy Brown, Upstream Director at Shell, said.

A total of 12 companies acquired 22 offshore blocks, Brazil’s regulator said. On June 7, Brazil will hold the 4th Production-sharing Round for areas located in the pre-salt layer.

By Tsvetana Paraskova for Oilprice.com

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