RIO DE JANEIRO (Reuters) - Exxon Mobil Corp roared into Brazil’s prolific offshore oil fields again on Thursday, clinching eight blocks in partnership with other oil firms eager to lap up the country’s choice reserves ahead of presidential elections later this year.
Exxon along with Petrobras and Qatar Petroleum Intl shelled out 2.8 billion reais (£601.3 million) for just one block in Brazil’s offshore Campos basin as the American oil major seeks to replace dwindling reserves.
Chevron Corp, Repsol SA, Royal Dutch Shell Plc, BP Plc and Statoil ASA also spent top dollar to lock down stakes in Brazilian offshore blocks, some of which may be part of the coveted pre-salt play, where oil is trapped under layers of salt beneath the ocean floor.
“We are more confident in investment in Brazil, without a doubt,” said Carla Lacerda, Exxon’s top executive in Brazil, after the round. “We have lots of opportunities ahead. We are analysing each round. We want a robust portfolio here.”
Another big winner was Brazil’s cash-strapped government, raking in 8 billion reais ($2.4 billion) of signing bonuses, a record for a concession-style auction and nearly double the 4.6 billion reais it forecast, despite a court’s surprise decision on Wednesday to eliminate the top two blocks from the auction.
Behind the resounding success is oil majors’ urgency to lock in stakes in Brazil before a presidential election in October that could bring to power a government seeking to halt or slow private investment in Brazil’s oil sector.
An oil auction earlier this week was less successful in regional rival Mexico, where leading centre-left candidate Andres Manuel Lopez Obrador has asked the president to postpone oil auctions if he wins in a July election.
“Brazil has better geology and less political risk than Mexico,” said Adriano Pires, a consultant at Brazil’s Center for Infrastructure.
There was a strong showing despite deflated expectations after a Brazilian audit court removed the two most attractive blocks, on the grounds that they should be auctioned under a production-sharing regime to create more value for the government. Now officials aim to auction those blocks in a June pre-salt round.
Exxon, which will operate six of eight blocks it won Thursday, took 10 blocks in a September round last year and a pre-salt block the following month.
Before that, it was among the few oil majors without a presence in the exploration of the vast offshore fields discovered off the Brazilian coast over the past decade.
Chevron, which has kept a low profile in Brazil since a spill in 2011, won four blocks — its first acquisitions in Latin America’s top economy in five years.
Wintershall, the oil and gas subsidiary of Germany’s BASF, also took seven blocks.
Higher oil prices and the need to replace shrinking reserves have boosted appetite among oil majors for costlier, higher-yield offshore ventures, though some projects are still seen as too pricey to be viable.
Despite the big bonuses paid to the government, it only awarded 22 of 68 blocks on offer and failed to offload any onshore blocks.
Reporting by Alexandra Alper, Marta Nogueira and Rodrigo Viga Gaier; editing by Matthew Lewis, Susan Thomas and Grant McCool