WASHINGTON: Petrobras, Exxon Mobil Corp and Chevron Corp win exploration rights in Brazil’s Equatorial Margin, betting that the nation’s environmental regulator will finally open the promising offshore oil region for drilling after years of delay.
Brazil sold 19 out of 47 blocks offered in the Foz do Amazonas basin in deep waters near the equator, making it the most competitive of the five basins where acreage was offered.
It is in the wider region known as the Equatorial Margin, where the oil industry sees the best opportunity for Brazil to replenish oil reserves and prevent production from declining in the early 2030s.
Petrobras and Exxon bid together to win 10 blocks in Foz do Amazonas. Chevron formed a consortium with China National Petroleum Corp (CNPC) to win nine, and outbid Petrobras at some areas.
Brazilian state-controlled oil producer Petrobras is in a years-long battle with the Ibama environmental authority for a permit to drill its first well in Foz do Amazonas basin, 540km from the mouth of the Amazon River.
Some consider it as promising as the so-called pre-salt region where Brazil’s biggest offshore fields are located.
Brazil held the auction amid the Israel-Iran conflict, which has put global oil markets on edge and underscores the advantages of having oil production outside of the geopolitically volatile Middle East.
“Exxon and Chevron kept their course in investing in oil and gas, while most of the European companies diversified to renewables, and they are sticking to their strategy,” said Marcelo de Assis, an independent oil consultant in Rio de Janeiro.
“They are betting that Ibama will grant drilling licences to Petrobras, and that activists will not prevail in court.”
Exxon stands to benefit from its experience as an operator in Guyana if there are geologically similar reservoirs in Foz do Amazonas, and its partnership with national oil company Petrobras mitigates regulatory risks, de Assis said.
Meanwhile, Chevron made a “bold move” by bidding against Petrobras for Foz do Amazonas blocks in partnership with CNPC, he said.
The fact that Chevron bid for the blocks without a Brazilian partner signals strong interest for offshore blocks in northern Brazil, where explorers hope to replicate discoveries in Guyana and Suriname, and where Petrobras has been making progress on an environmental licence, said Rivaldo Moreira Neto, a director at A&M Infra consultancy.
Other areas attracted less interest. The Santos basin that is home to Brazil’s biggest oil fields, but where exploration has disappointed for more than a decade, saw less interest with only 11 out of the 54 blocks sold. — Bloomberg
