Brazil’s ANP to postpone oil and gas auctions in 2019

Petrobrasy downstream divestitures
Brazil is moving forward with its sale of downstream and midstream assets, executives have told the investment community.

The president of the National Oil, Natural Gas and Biofuels Agency (ANP), Décio Oddone, said in late May that “there is room” for the postponement to 2020 of at least one of the three major oil auctions for the second half of this year.

“Three auctions in the same semester can overwhelm the technicians of private companies,” Oddone said.

In its assessment, more time for business analysis would bring greater competition to the auctions. Another aspect is the accumulation of tasks within the regulatory body, responsible for the processing of the bidding processes.

The president of the ANP said that, called for opinion, would indicate the postponement of the 16th round of concession of areas of the pre-salt, originally scheduled for October 10.

The three rounds of 2019 are scheduled to take place in less than a month and will require large volumes of investment from oil companies. The federal government’s collection of bonuses at the auction of oil and natural gas exploration areas this year may reach, in all, around R $118 billion, almost four times more than that recorded in the last six competitions held in the last two years, of R $29.6 billion.

Scheduled for October 28, the Transfer of Rights surplus auction is the largest of them: the four areas offered totaled R $106.6 billion in fixed subscription bonus.

Already the 6th round of sharing is scheduled for November 7 and will offer five blocks. If all areas are sold, the Union will raise R $7.85 billion in signature bonuses.

The 16th round of concessions, in turn, is scheduled for October 10. The sale of all the areas offered in the bid, for the minimum amount, totals R $3.2 billion in bonuses.

Oddone also said that ANP would issue a resolution to promote transparency of natural gas prices within two months. According to him, who did not want to go into details, there are only “some internal procedures of the ANP”. He participated in the 10th Oil and Gas Seminar, organized this week by Marsh and JLT in Rio de Janeiro.

The idea, said Oddone, is to pursue the current degree of transparency of gasoline and diesel prices. Today, the ANP takes the prices of these fuels practiced in five ports to offer a comparison with prices freely practiced by Petrobras in 35 supply points. By the measure taken a month ago, the president of the regulatory agency praised the president of the company, Roberto Castello Branco, who acted before being urged by the ANP.

“Transparency and competition will lead to fair prices,” he said. He recalled that the discussion about prices only exists because, in Brazil, there is still an oil and gas industry, but a monopoly, in reference open to the dominion of Petrobras. According to him, because they are commodities, all derivatives prices should adjust according to the international competition environment. “The process of creating this industry depends basically on the divestments of Petrobras. We are talking about something that will be standing in the middle of 2020.”