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Shell Justifies Absence of Bids Due to High Prices in Blocks Offered in the Onerous Assignment Mega Auction, Last Wednesday (11/06)
The CEO of Shell in Brazil, André Araujo, related the company’s lack of proposals for the blocks auctioned in the onerous assignment bidding round to the high bonus requested by the government for signing the contracts.
According to the CEO, “the blocks in the onerous assignment auction were expensive”, he stated in an interview with several newspaper and TV journalists.
As Click Oil and Gas published last Wednesday (11/06), the excess oil auction of the onerous assignment ended with Petrobras and the Chinese winning two areas in the mega auction of the pre-salt excesses.
Despite this statement, the CEO of Shell in Brazil considered Wednesday’s auction a success. The Búzios field was awarded to Petrobras in partnership with the Chinese companies CNODC and CNOOC, while Itapu was awarded solely to the Brazilian state-owned company.
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The Decision
Araújo stated that “not participating in the auction was a business decision” and that the decision was made based on the group’s capital discipline strategy.
By stating that they were “expensive bids” and that they “did not pass Shell’s cut”, the offered blocks did not meet the approval criteria of the oil company.
The executive added, upon leaving the auction, that Shell “has been adopting a very strong investment discipline posture since 2019, and this decision was made after a very challenging internal process of analyzing all these proposals”.
The lack of proposals from Shell also occurred in the auction of the 6th round of pre-salt sharing held the following day, November 7. 17 companies were approved by the ANP to compete for the blocks, but no one submitted a bid.
In addition to Shell, the international giants ExxonMobil, BP, and Chevron were present, but the lack of bids only demonstrated the disinterest of foreigners in the Brazilian auction model.
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