Jan 10, 2021 News
– equivalent to size of just three of Guyana’s blocks combined
Kaieteur News – Global energy information provider, S&P Global has reported that Brazil has cleared 92 offshore exploration and production oil blocks to be licenced in a public sale. The blocks were approved by the National Energy Policy Council (CNPE), the government agency charged with advising the President on energy.
The blocks will be part of the 17th bid round of Brazil, and will be sold under the concession agreement – an alternative to the Production Sharing Agreement (PSA) which Brazil is now cleaving more to, said the National Petroleum Agency (ANP), Brazil’s oil industry regulator. The concession agreement is seen as more favourable, and Brazil has come under pressure to make its regulatory infrastructure more attractive to investors.
“There will be 92 blocks offered in the offshore sedimentary basins of Potiguar, Campos, Santos and Pelotas,” the ANP is reported as saying. The blocks will cover 53,900 square kilometres.
To put that into perspective, the combined award of Guyana’s Stabroek, Kaieteur and Corentyne blocks is 52,840 square kilometres. In contrast, Brazil managed to split such an acreage into 92 blocks.
Guyana had made its oil awards in contravention of the legal guidelines for block sizes, granting more acreage than was legislated for. Of note to Guyana is that each Brazil block will carry an attractive price, securing a lot of revenue for the Brazillian people.
Guyana has never held a bid round. Its blocks have been awarded generally on a first-come-first-served basis. It only ever received one signing bonus, US$18M from ExxonMobil when the government granted a PSA to the supermajor and its partners in 2016.
Guyana is considering having its first bid round this year, though the country has not updated its legislation in this regard. It hasn’t made pronouncements about a new model PSA either.
It has attracted much excitement though, about the many discoveries made in the Guyana-Suriname basin, especially Exxon’s 18 Stabroek block discoveries.
Brazil’s geologists, according to S&P, believe that the same geological play which got ExxonMobil its 18 discoveries extends along Brazil’s northern coast in the Foz do Amazonas and Para-Maranhao basins. However, these basins are not part of the 92 blocks approved for Brazil’s 17th bid round, due to concerns from environmental groups about a coral reef discovered in the area.
Brazil’s ANP is expected to hold a public audience to discuss the auction rules and the concession contract on February 3, and the public bidding round is set for October 7.
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