Petrobras to bid for Atapu and Sepia oil fields

Brazilian state-owned oil company Petrobras has decided to exercise its rights of first refusal and bid for the deepwater oil fields Sepia and Atapu.

Petrobras said earlier in the week that it would be aiming to take a 30 per cent stake in each field, for which it would need to pay a total of 3.341 billion reais (around $625.9 million) if the percentage is confirmed.

For a stake in the Atapu field, Petrobras would pay 1.2 billion reais ($224.8 million) while the 30 per cent stake in Sepia would cost the company around 2.141 billion reais ($401.1 million).

According to the company, an auction for the blocks located in the pre-salt region is expected for later this year.

“The expression of interest is in line with the company’s strategic plan, with a focus on the concentration of its resources on world-class assets in deep and ultra-deep waters”, Petrobras stated in a securities filing.

It is worth reminding that Petrobras agreed on the rules for the Sepia and Atapu fields sale earlier this month. Namely, the company approved an agreement with the government for compensation that must be paid to the company in the event of an auction of reserves.

Petrobras said that the firm would receive $3.253 billion if reserves from the Atapu field are auctioned off. It would also receive $3.2 billion if reserves from Sepia are sold off. The payments would be made over roughly a decade.

Also, this is not the first time the Brazilian government attempted to auction off reserves in the Atapu and Sepia offshore oil blocks.

The first sale attempt was made in early November 2019. At the time, oil companies were bidding for ownership in the Buzios, Sepia, Atapu, and Itapu oil fields.

At the time, Petrobras exercised its pre-emptive rights to act as the operator of the Buzios and Itapu areas with a minimum of 30 per cent stake ownership in any winning consortium.

Brazil’s petroleum regulator ANP hoped to bring in around $26.2 billion at ‘a minimum’ if bids for all four areas on offer are received.

But what was described as a ‘mega-bidding round’ ended in disaster. After the bidding round, Petrobras ended up as the operator with a 90 per cent stake in the consortium with CNODC Brasil Petróleo e Gás and CNOOC Petroleum Brasil, which acquired the exploration and production rights of the surplus volume of the Búzios field.

Also, Petrobras acquired 100 per cent of the exploration and production rights of Itapu field surplus volume. Atapu and Sepia oil fields received no bids.

Brazil ended up with only $17.1 billion instead of the desired $26 billion from upfront signing fees. However, most of it was paid by state-owned Petrobras.