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The United States stands ready to help Brazil to improve the rules for bidding in its oil auctions in order to make them more attractive to international oil majors, U.S. Secretary of Energy Dan Brouillette said on Sunday during a visit to Brazil.
“And we stand ready to assist, should it be desired or needed, to help design new auctions that might produce results that are more conducive to the desires of the Brazilian government,” Brouillette told reporters, as carried by Reuters.
At the end of last year, Brazil held three separate oil auctions for what it said were very attractive and prolific offshore areas. The auctions, however, failed to excite as much interest as the Brazilian government had hoped, while analysts deemed those auctions failures.
Last year’s final oil auction in Brazil ended in a flop, with Big Oil staying away from bidding and only one of five blocks awarded, suggesting that the massive upfront payments and complex royalty schemes have kept the world’s largest oil companies from participating.
The underwhelming results of the final oil auction for the year came a day after another near-flop in the biggest oil auction ever held in Brazil, in which Big Oil didn’t bid and Petrobras picked up two of the four blocks on offer.
Speaking in Rio de Janeiro on Sunday, Secretary Brouillette said, as carried by Reuters:
“We looked at what happened in the last auction, with regard to the blocks. We understand, I think clearly, why some investors may have shied away from that.”
Big Oil will likely snub Brazil’s huge oil auctions in 2020, just as they did in last year’s highly anticipated bid rounds, because projects and prospects around the world are competing for the majors’ disciplined capital spending, the head of BP in Brazil said last November. Assets in other countries will be more attractive than Brazil’s resources, BP Energy Brazil’s president Adriano Bastos told local economic daily Valor Economico back then.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.