Brazil working to increase attraction of new frontier offshore areas

Brazil is studying ways to enhance the attraction of new frontier offshore exploration areas offered under the concession regime, according to a technical note prepared by oil and gas regulator ANP and obtained by BNamericas.  

Among the options under consideration is increasing the size of the blocks and reviewing the minimum signature bonus that must be paid in the bidding rounds. 

One of the concerning cases is that of the Pelotas basin in the south of the country, in which only eight of the 205 blocks offered since 1998 have been acquired, although all of them were later returned to the ANP. 

According to the regulator, two factors seem to contribute to the low attraction of Pelotas: the reduction in the size of the blocks and the increase in the value of the minimum bonus over time. 

In neighboring Uruguay, for example, six blocks were auctioned between 2019 and 2022, with significant participation of oil majors. These blocks are equivalent to the area of 28 blocks in Pelotas. 

On the issue of bonuses, there was a large increase in the value for the Pelotas blocks, especially from 2015 onward, the ANP pointed out.  

The watchdog also points to the low exploratory investments in the basin, where less than 50,000km of 2D seismic was acquired after the agency was created in 1998, and only one well was drilled, in 2001 (1BRSA61RSS, in block BP-1). 

Before the creation of the ANP, 11 wells had been drilled in the underwater portion of the basin, but without significant evidence of hydrocarbons, and about 35,000km of 2D seismic was acquired.

“The discrepancy of exploration investment in the Pelotas basin, in the Uruguayan portion, with extensive 3D seismic coverage, is striking; while in the Brazilian portion, besides the more spaced 2D grid, there is no 3D seismic data available, essential for mapping turbidites, the main target of the basin,” the ANP said in the note. 

The regulatory agency highlighted that Pelotas is directly correlated to the Walvis, Lüderitz and Orange basins, where Shell and TotalEnergies made significant oil strikes in 2022. 

“The companies' interest in Uruguay was driven by discoveries on the west coast of Africa, which have similar geological characteristics to those in Uruguay, and likely similarities to the Pelotas basin in the Brazilian portion,” the ANP said. 

Other new offshore frontier areas in the country include the Jacuípe, Camamu-Almada, Pernambuco-Paraíba, Sergipe-Alagoas, Ceará, Potiguar, Pará-Maranhão, Barreirinhas and Foz do Amazonas basins.