Brazilian Licensing Round Attracts Heavy Hitters

QatarEnergy expands business in Brazil with $1.3 billion co-bid for the rights to Sepia field.

International consortiums scoop the rights to produce remaining volumes from a pair of key offshore fields in Brazil.

Big players have won big in Brazil’s latest licensing round with France's TotalEnergies, Royal Dutch Shell, Malaysia's Petronas, and QatarEnergy on Friday each snapping up promising offshore fields in Brazil together with state-owned Petrobras, paying nearly $2 billion in the process.

The rights to the produce surplus volumes from the prized Sepia field went to a consortium of TotalEnergies (28%), QatarEnergy (21%), and Petronas (21%). Petrobras, whose independent offer for the field fell short, later entered the winning group by exercising preference rights to take a 30% stake. The TotalEnergies group offered a profit oil share for the federal government of 37.43%, besting Petrobras’ solo proposal of 30.3%.

“This achievement marks a significant expansion of our business in Brazil, a key country for QatarEnergy, as we continue to deliver our growth strategy focused on energy efficient hydrocarbons development and supply,” said QatarEnergy boss Saad Sherida Al-Kaabi.

The consortium paid a signing bonus of around $1.3 billion for the rights to the field.

There was no competition for the nearby Atapu field. A Petrobras-led consortium presented the only offer to obtain the contractual right to produce additional volumes from the pre-salt field. Petrobras (52.5%), Shell (25%), and Total (22.5%) together paid a $740,000 signing bonus for the rights.

Oil majors will be able to add production to their portfolios in the short term. Petrobras is ramping up production at Sepia to 180,000 B/D and has reached the 160,000 B/D maximum capacity at Atapu. A second platform is planned for each field.

Sepia and Atapu were the two remaining fields in the original transfer of rights agreement that had extra volumes left to be contracted. The 2010 transfer of the rights deal signed between Petrobras and the Brazilian government allowed the state-controlled company to produce up to 5 billion BOE from Buzios, Itapu, Sepia, and Atapu.

Brazil attempted to auction the fields in 2019, but only Buzios and Itapu were successfully awarded, in part to legal entanglements and sizable bonus requirements.

Sepia and Itapu could boost Brazil’s production by 12% over the next 6 years, adding 700,000 B/D and bringing in almost $40 billion in investment, its energy ministry said after the auction.

Petrobras is set to receive $6.2 billion for past investments in the two fields.