Promise of oil lures majors to the Amazon basin

Brazil’s promising, but environmentally sensitive Foz do Amazonas, near the mouth of the Amazon, generated sales of 19 blocks in the latest auction held by the country’s National Agency of Petroleum, Natural Gas and Biofuels (ANP).

A consortium between oil major ExxonMobil and Petrobras secured 10 offshore blocks in Foz do Amazonas, part of the Equatorial Margin during the 5th Permanent Concession Offer Cycle held by ANP. In the first five blocks, the consortium will have Petrobras as operator, with a 50% stake, in partnership with ExxonMobil (50%). In the other five blocks, ExxonMobil will be the operator and Petrobras will have a 50% stake.

Another consortium between Chevon and China National Petroleum Corp (CNPC) acquired nine blocks in the Foz do Amazonas. Chevron will act as operator in all the blocks. In six of the blocks, the Big Board-traded US oil company will hold a 65% stake and CNPC the remaining interest. The two parties will each hold a 50% in the remaining three blocks.

Drilling in the Foz do Amazonas pits the oil industry against environmentalists and local indigenous people, who say such activity damages local ecosystems. But the oil industry sees great hydrocarbon potential as it borders huge discoveries found in the Guyana-Suriname basin, which has an estimated 11 Bn bbl of recoverable oil and gas resources.

“Drilling in the Foz do Amazonas pits the oil industry against environmentalists”

Acting as operator with a 70% interest, Petrobras also acquired three blocks in the Pelotas Basin, with Petrogal Brasil, a Brazilian subsidiary of the Portuguese energy company Galp Energia, taking the remaining 30% stake.

Overall, Petrobras-related blocks generated total sales of BRL139M (US$25.3M). The Brazilian state-owned oil company was pleased with the result of the auction, according to Petrobras chief executive, Magda Chambriard. “With this result and with the continuity of our exploratory activities, including in the Equatorial Margin and in the Pelotas Basin, we remain optimistic about our possibilities of replenishing oil reserves and guaranteeing Brazil’s energy security," she said.

Besides the sales of the 19 blocks in the Equatorial Margin and three in blocks in the Pelotas Basin, 11 blocks were acquired in the Santos Basin including six by Karoon Brasil, four by Shell and one by Equinor, and one block in the Parecis Basin by Dillianz.

Overall, the 34 blocks sold by ANP drew sales of BRL1.5Bn (US$265M).