Brazil’s biggest ever oil auction has failed to attract the interest of major oil companies so far, with just 11 companies having registered.
Asian firms dominate the names which are looking to bid on the 12billion Libra field off Brazil, with Sinopec, India’s Oil and National Gas Corp and Petronas on the list.
They will be joined in the bidding process by Shell, Total, Petrobras and Ecopetrol, but many US and European players – including BP, Chevron and ExxonMobile, have decided not to bid for the field.
Brazilian authorites said they had anticipated more than 40 companies to lodge interest for the field. The country’s regulator, Magda Chambriard, told reporters last night the final figure was around a quarter of what had been expected.
The auction will be the first under new laws in the country aimed at strengthening Brazil’s control over its offshore resources.
Under the new rules, Petrobras will be required to have a 30% minimum stake in in the winning bid, and to run exploration and production as operator of the field.
Petrobras and partners will give the government at least 41.65 percent of production after deducting output to cover costs. The government will choose the group that offers the most oil, while requiring the majority of equipment and services to be built locally.
But the new rules look to have put off some of the more obvious contenders for the giant field.
“After reviewing this opportunity, we decided not to participate in the Libra bid round,” said ExxonMobil spokesman Patrick McGinn told Bloomberg.
“We continually look for new exploration and development opportunities around the world where we can leverage our experience and technology, and we look forward to evaluating potential opportunities in Brazil.”
The “surprisingly small” turnout was caused by limited amount of geological data, a lack of experience with the production-sharing model and the potential size of investments, said Bank of America analyst Frank McGann.
“Lonely Libra,” McGann wrote. “This suggests that only two to three consortiums are likely to be formed to bid.”
The companies which will be bidding are: Petrobras, ONGC, Petronas, Ecopetrol, CNOOC, China National Petroleum, Galp, Repsol, Shell, Mitsui and Total.
The field is one of the pre-salt oil finds off the country’s southeast coast, and lies in water 2000m deep, with 5000m of sand rocks and salt above it.
Crude sales from Libra are not expected to begin before 2021, analysts have warned, with extraction costs expected to be higher than predicted due to gas levels.
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