Marta Nogueira, Gram Slattery, and Sabrina Valle

RIO DE JANEIRO, (Reuters) – The top oil companies in the world will be competing in Brazil for Friday’s chance at securing some of the most sought-after offshore oilfields. This competition is a measure of Brazil’s ability to attract large investors and their willingness to continue spending on old assets.

Eleven businesses, with a range of sizes from Exxon Mobil Corp (NYSE) to Royal Dutch Shell(LON:), PLC to small local players are all signed up for bidding on two fields known as Sepia or Atapu. Both assets are located in the prolific offshore oil field known as the “pre-salt”. The government has asked for 7.138 billion and 4.002 trillion reais respectively for Sepia.

Brazil tried to sell both the fields but neither field received any bids in 2019. Complex legal issues at the time and high signing bonuses prevented oil majors from selling both fields.

According to industry sources consulted, Reuters has found that bid terms were more appealing this time due to significant reductions in signing bonuses. Also, the government has reduced the amount of oil to be handed over to the state (known as profit oil) from 26.23% – 5.89% Atapu and 27.88% – 15.02% Sepia.

Rodolfo Saboia from Brazil, head of the oil regulator said to Reuters that “Based on our interactions with CEOs we are expecting competition.”

According to Reuters, potential bidders are a group that includes Petrobras, Exxon, and Petrogal. This consortium is a joint venture of Galp Energia SGPS SA of Portugal (OTC:). Exxon refused to comment, and neither Petrobras or Galp responded immediately to comments requests. Most of the parties involved have had some preliminary talks or met with their operational partners.

They are appealing because Petrobras discovered oil commercially in both blocks. This eliminates the possibility of further exploration.

According to the Energy Ministry of Brazil, if both fields are granted, it could increase Brazilian oil production by 12 percent over the next decade. It also means that they can bring in nearly $40 billion in investments. Petrobras will receive $6.2 billion as compensation for previous investments in these fields.

Petrobras and Shell are the 11 participating companies in this auction that will take place at 10 AM local (1300 GMT) Chevron Corp (NYSE :), Ecopetrol SA (NYSE :), Equinor ASA (NYSE :), Enauta Participacoes SA, Petronas TotalEnergies SE, and Qatar Energy

($1 = 5.68 reais)