Oil be back

Oil bids postponed and new regulation to promote mature fields in Brazil.

Following the crash in crude oil prices this year due to the Covid-19 pandemic the CNPE, Brazil’s energy council of the Ministry of Mines, postponed its 2020 17th oil bidding process until 2021.

In this context, the only oil and gas bid that will take place in Brazil in 2020 will be the Open Acreage Programme, in which the ANP, the Brazilian oil and gas regulator, will offer concession agreements for exploratory blocks with marginal accumulations of oil and natural gas. The areas offered were returned to the state as they did not attract offers in previous rounds.

The ANP will make 711 areas available for bids as part of the Open Acreage Programme, which mostly attracts the interests of SMEs. The system allows companies to express interest in exploration areas before the final bid is submitted in an open tender. Press reports suggest that more than 57 companies from 13 different countries are reportedly interested in the bid.

“This bidding system allows us to explore areas without the usual time limitation rounds have.”

ANP senior official.

A source from the institutional relations department of the ANP told us, “This bidding system gives the opportunity for companies to explore areas without the time limitation that traditional rounds have”.

Consequently, and with the purpose of increasing the appeal of mature oil fields – those which are reaching the peak of their production and have been operated for more than 25 years – the ANP is working on the preparation of three new regulations based on: i) the decrease in royalty payments; ii) the improvement of the definition on marginal fields and iii) the simplification of data required from operators.

“The aim is to increase the awareness of the potential that sedimentary basins have”

ANP senior official.

The ANP source added, “It would be simplistic to label the measures implemented by the ANP, always under the guidelines of CNPE, as being specifically focused on foreign companies.” However, the source affirmed that the aim of the new regulations is “to increase the awareness of the potential that sedimentary basins have in the country; to decentralise investments – whether made by national or foreign companies – in the sector and to favour long-term investments which promote the expansion of production and generate employment and income for Brazil.”

All good intentions ANP, let’s hope further postponements won’t ruin the bid!

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