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Exxon prepares to bid for new oil blocks in Brazil -sources -Breaking

by Mike Robinson

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© Reuters. FILE PHOTO – The Exxon Mobil Corporation logo is displayed on a monitor at the New York Stock Exchange floor, New York. December 30, 2015./File photo/File photo

Sabrina Valle

HOUSTON (Reuters). Exxon Mobil Corp (NYSE:). People familiar with the matter stated that Corp (NYSE:) is ready to submit a bid for blocks in Brazil’s deep water oil fields. This area has been a key focus for Brazil’s oil and gas production growth.

It would be its first major investment since 2020, when it suffered a $22.4 billion loss annually. There could be more than one bidder with eleven companies registering to take part in the auction. Royal Dutch Shell, TotalEnergies (LON) and others have also signed up. Chevron (NYSE:).

Brazil’s Energy Ministry stated Monday that if both of the fields are granted, it could increase Brazil’s output by 12 percent and attract almost $40 billion worth of investment in the next 10 years. Petroleo Brasileiro (the state-oil firm Petroleo Brasileiro), would get $6.2 Billion for previous investments.

Exxon held meetings to talk about a partnership with Petrobras in the development of Atapu, Sepia. The people claimed that Petrogal, a Portuguese subsidiary of Galp Energia in Portugal, is considering a minority partnership for a 3-way deal.

Exxon refused to comment, citing business strategies reasons.

Petrobras or Petrogal have not yet responded to comment requests.

People said that bidders will likely make joint offers because of the required investments.

SECOND BITE AT AUCTION

Atupu is also up for sale. The auction in which they were offered was held in 2019. Exxon had been prepared to offer a bid for a stake of 45% in the central block (called Buzios) in partnership to Petrobras.

Buzios produces about the same quantity as Venezuela today. The people claimed that Exxon pulled out of the auction due to uncertainty about total spending. This left Petrobras with billions in investments.

Exxon declined to comment regarding the 2019 auction.

Brazil has reduced by 70% its licensing fees to Sepia/Atapu, making them around $2 billion. Based on how much future production the consortium would be willing to share, the winner will also be selected.

Petrobras will be granted first right to operatorship, with a 30% stake each in the two fields. This is even if it loses out on its consortia. Petrobras has 30 minutes to choose whether or not it wishes to be part of the winning team and to manage the assets.

This story has been updated to correct the dateline for Dec 16.

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