Brazil to auction 55mn bl of pre-salt crude
By Nathan Walters / Argus
Petroleumworld 09 14 2021
Brazil's state-owned pre-salt marketing firm PPSA will offer more than 55mn bl of pre-salt crude in a 26 November auction.
The auction on the Sao Paulo stock exchange B3 will offer two, three and five-year contracts for crude from the Buzios, Tupi, Mero and Sapinhoa fields in the Santos basin.
Buyers will have the option to acquire a three-year contract covering 43.4mn bl or a two-year contract covering 19.8mn bl of 29°API Mero crude. The field is scheduled to receive its first definitive 180,000 b/d production system next year.
From Buzios, buyers can acquire a two-year contract covering 4.2mn bl 28°API crude or a three-year contract covering 6.6mn bl. The field currently produces around 580,000 b/d and is forecast to climb to 2mn b/d by 2030.
Brazil's 30°API Sapinhoa crude will be offered under a five-year contract covering 2.4mn bl or a three-year contract covering 1.6mn bl. At Tupi, buyers will bid on a five-year contract for 3.3mn bl of 28°API or a three-year agreement covering 2mn bl.
"It is important to emphasize that the volumes are estimates of the government's future portion of oil from these fields, which include the uncertainties inherent to the process. This means that, when auctioning a lot, the buyer will have available the entire cargo named in the period, even if it is higher or lower than the volume stipulated in the notice," PPSA said of the estimates.
The first auction round will cover the longest contracts and will be awarded to the bidder offering the highest premium over reference prices from oil regulator ANP. In case of no takers, a second round will award the shorter term contracts based on highest premium. If required, a third round will award the shorter term contracts based on the lowest discount, with PPSA retaining a right of refusal.
Today's publication of the draft notice opens a public hearing process. A final notice will be published on 26 October, PPSA said.
The November auction will be the third supply contract offer launched by PPSA. In 2018, the company held to similar auctions for supply contracts for Tupi, Sapinhoa and Mero supply.
In a second auction, months after a first attempt failed to attract bidders, Brazil's state-controlled Petrobras went unchallenged for a three-year contract covering 10.6mn bl of crude from Mero, the first commercial discovery in the Libra block, and a separate 36-month deal for 600,000 bl of crude from Sapinhoa. France's TotalEnergies secured a one-year contract covering 1.1mn bl from the Tupi field, then known as Lula, at a premium of R1 ($0.24)/m3 to the ANP reference price.
Established in 2013, PPSA represents the federal government in 17 production-sharing contracts currently pumping around 520,000 b/d. The firm has raised around R1.9bn from oil sales since 2018, and expects to raise around $75bn in sales through 2030, when output from the PSCs it manages climbs to around 3.6mn b/d.