(World Oil) – Petrobras, Exxon Mobil Corp. and Chevron Corp. have won exploration rights in Brazil’s Equatorial Margin, betting that the nation’s environmental regulator will finally open the promising offshore oil region for drilling after years of delay.
Brazil sold 19 out of 47 blocks offered in Foz do Amazonas basin in deep waters near the equator, making it the most competitive of the five basins where acreage was offered. It is in the wider region known as the Equatorial Margin, where the oil industry sees the best opportunity for Brazil to replenish oil reserves and prevent production from declining in the early 2030s.
State-controlled oil producer Petrobras is in a years-long battle with the Ibama environmental authority for a permit to drill its first well in Foz do Amazonas basin, 335 miles from the mouth of the Amazon River. Some consider it as promising as the so-called pre-salt region where Brazil’s biggest offshore fields are located.
Brazil held the auction amid Israel’s air strikes against Iran, which have put global oil markets on edge and underscore the advantages of having oil production outside of the geopolitically volatile Middle East.
“Exxon and Chevron kept their course in investing in oil and gas while most of European companies diversified to renewables, and they are sticking to their strategy,” said Marcelo de Assis, an independent oil consultant in Rio de Janeiro. “They are betting that Ibama will grant drilling licenses to Petrobras, and that activists will not prevail in Brazilian courts.”
Exxon stands to benefit from its experience as an operator in Guyana if there are geologically similar reservoirs in Foz do Amazonas, and its partnership with national oil company Petrobras mitigates regulatory risks, de Assis said. Meanwhile, Chevron made a “bold move” by bidding against Petrobras for Foz do Amazonas blocks in partnership with China National Petroleum Corp., he said. Petrobras and Exxon bid together to win 10 blocks in Foz do Amazonas, while Chevron teamed up with CNPC to win nine.
Other areas attracted less interest. The Santos basin that is home to Brazil’s biggest oil fields, but where exploration has disappointed for more than a decade, saw less interest with only 11 out of the 54 blocks sold. Shell and Karoon Energy Ltd. were the main bidders for Santos blocks.
Shell is reinforcing its presence in the Santos basin, said Lucio Prevatti, an executive manager for exploration and production. The company decided not to bid for areas in Pelotas basin, where it has dozens of blocks in exploration stage with Petrobras. Prevatti said that “multiple risks” discouraged the company from bidding for blocks in the Equatorial Margin.
Environmental activists have protested against the auction that is happening five months before the COP30 climate conference takes place in Brazil. Opponents have highlighted the proximity to indigenous lands, nature reserves and biodiverse marine sanctuaries including Fernando de Noronha archipelago.
Total signing bonuses surpassed expectations and reached 989 million reais ($181 million) in the country’s first oil auction in about 18 months, with exploration rights granted for 34 areas out of 172 offered. The government was quick to say the auction was a success and will bring in 1.5 billion reais in exploration investments.
“This result proves that we are on the right path,” Mines and Energy Minister Alexandre Silveira said in a statement.
