Petrobras wins rights of Buzios, Itapu fields in Brazil ‘mega-auction’

Following the mega-auction of production-sharing rights in the Brazilian presalt on the 6th November, Petroleo Brasileiro SA (Petrobras) will serve as operator with a 90% stake in a consortium with CNODC Brasil Petroleo e Gas Ltda (5% stake) and CNOOC Petroleum Brasil Ltda (5% stake) of Buzios field from the transfer of rights agreement.


Petrobras also acquired 100% of the E&P rights of Itapu field surplus volume.


“We are building the future for Petrobras. The Buzios oil field is no doubt a world-class asset. It’s the world’s largest offshore oil field, with substantial reserves, low extraction cost, low balance price, that is, it has a high return on invested capital,” noted Petrobras Pres. Roberto Castello Branco.


Buzios field, which began production in April 2018 and already produced 100 million boe, is the largest discovered deep-water field in the world. It has light oil and proved high-productivity wells, Petrobras said.


“The knowledge acquired over ten years in the area and its great potential, combined with the conditions of the asset acquisition, with the signing bonus of 68.19 billion reals (US$16.7 billion), compatible with the value of the field and the oil profit of 23.24%, at the minimum level, increases the attractiveness of Buzios to the consortium led by Petrobras,” the company said.


Average production from Buzios field has reached 600,000 boe/d, considering the four platforms installed: P-74, P-75, P-76, and P-77.


A fifth platform, scheduled to start production in second-half 2022, is already under construction.


For Itapu field, Petrobras understands that the unit which it started the contracting process in July will be responsible for both the production of the transfer of rights and the surplus volumes, which made the “full acquisition of the area extremely attractive economically, given the low additional investments and the conditions to purchase, corresponding to a signing bonus of 1.77 billion reals and an oil profit at the lower level of 18.15%,” the company said.


In a research note, analysts with Raymond James & Associates Inc made some key observations about the latest Brazilian auction.


“From our review of yesterday’s bids we have a few takeaways largely missed in the news cycle: 1) unlike previous bidding rounds, yesterday’s blocks were already explored (with proven reserves), thus Brazil demanded a much heftier fee than past auctions; 2) further, the US$17-billion fee across the two winning bids is still more than all previous auctions combined, despite a narrative of ‘complete disaster’ for Brazil; 3) yesterday’s results are unlikely to move the needle for global oil supply, with the first oil likely three to five years out for any hypothetical projects in the blocks.”


Source: Oil & Gas Journal