The negotiations between Petrobras and the North American Exxon for the formation of a consortium, was the most promising among the attempts of transactions with private companies.
Amid the biggest oil auction ever held in Brazil, state oil company Petrobras has been holding increasingly frequent conversations in search of foreign partners willing to share huge signing bonuses and investments, according to sources familiar with the matter. This Thursday, Petrobras announced the sale of Liquigás for 3,7 billion reais.
According to four Reuters sources, the negotiations between Petrobras and the North American Exxon for the formation of a consortium, was the most promising among the attempts of transactions with private companies, however the conversations ended days before the bidding round.
As a result, Petrobras made an agreement with Chinese state-owned companies to bid in the auction, which was considered frustrating by the market, which expected the presence of large foreign private companies.
The sources also said that most negotiations to form consortia between the Brazilian state-owned oil company and other oil companies appeared to be short-lived and relatively informal in nature. With Exxon, which could have acquired a large slice of the Búzios block, it was no different.
A possible consortium between the Brazilian state-owned company and the US company, which would also include the two Chinese state-owned companies that bought 10% of the rights to the Búzios block —CNODC and CNOOC—, would have given a seal of approval from the private sector to the awaited auction.
The reason for the negotiations not going ahead has not yet been revealed, however, one of the sources said that there were disagreements between Petrobras and Exxon about how billions of dollars would be paid to the Brazilian company in compensation for previous exploration.
Others cited differences on how much to invest in platforms to speed up production and also the North American's interest in taking over field operations, something Petrobras did not agree with.
"It's a terrible system," Economy Minister Paulo Guedes said on Thursday. “You have to go through many layers of negotiations just to get to the oil.”, to explain why the country has not been able to raise money from foreign oil companies.
Due to the agreement signed between Petrobras and the Brazilian government in 2010, the state-owned company already has rights to develop up to 5 billion barrels of oil equivalent in the transfer of rights area.
Wednesday's bid sought to sell volumes beyond those already contracted, as a result any winning member of a consortium would need to close, after the auction, an agreement that would compensate Petrobras for investments already made in the region.
In the end, Petrobras was left virtually alone in submitting minimum bids for two of the four areas in the transfer of rights surplus bidding round, which authorities hoped would cement Brazil's rise as an undisputed powerhouse in Latin America.
In addition to Búzios, Petrobras also won Itapu, the smallest block on offer, with an individual bid. Sépia and Atapu, the second and third largest blocks in the auction, respectively, received no bids.
The government's expectation of raising was around 106,5 billion reais in signing bonuses. Instead, Brazil collected just under 70 billion reais.
On the 7th, the Brazilian state oil company made a bid for the largest of the five oil blocks offered in the 6th pre-salt Round, called Aram. And China's CNODC has committed to a 20% stake.
No private company has bid for fields that are known to hold billions of barrels of untapped oil, and this unexpected behavior has been disappointing for the market.
After the results, the Minister of Mines and Energy, Bento Albuquerque, told Reuters “You can change the exploration regime, these parameters as a whole, the methodology of the auction, that is, the process as a whole is what we are evaluating, and I have I'm sure we'll improve it."
