ANP's fifth auction was a financial success, but a setback for national energy security

The public session of the 5th cycle of the ANP Permanent Offering exceeded fears and, from a revenue perspective, was satisfactory. However, the results represent a defeat for Brazil's energy security and sovereignty.

The regulatory agenda underway in the country, such as the review of the reference price of oil for calculating royalties, the review of special participation, the increase in local content, the judicializations and the difficulties of environmental licensing related to the Foz do Amazonas basin, together with the fall in the price of a barrel of oil and the global geopolitical context, did not represent obstacles to the interests of oil companies, especially the multinationals that acquired most of the areas on offer.

Of the 172 blocks offered, 34 were acquired by nine oil companies. Petrobras, as operator, won only eight blocks, five in the Foz do Amazonas Basin, in a consortium with ExxonMobil, and three in the Pelotas Basin, in a consortium with Petrogal. The state-owned company also participates in a consortium operated by ExxonMobil, which holds another five blocks in the Foz do Amazonas. Thus, Petrobras acquired only 37.6% of the total areas auctioned and 24.2% of them as operator. This is a modest participation in the auction, especially considering that the state-owned company is close to obtaining the license to drill in the Foz do Amazonas and, furthermore, because it has not consistently expanded and diversified its exploration portfolio to other basins in the country.

Chevron was the protagonist of the auction, winning nine exploratory blocks as operator in a consortium with the Chinese company CNPC in the Foz do Amazonas basin, which represents 30.6% of the total areas auctioned and 53.1% of the areas auctioned in Foz do Amazonas. With this, the multinational, which has not produced oil and/or natural gas in Brazil since mid-2023, demonstrates that it has, as a strategy, the acquisition of exploratory areas with high potential in the country, such as Foz do Amazonas and Pelotas, where the oil company alone acquired fifteen blocks in 2023.

In the post-salt Santos Basin, 11 blocks were acquired by multinational oil companies that already have operations in the region: Shell acquired 4 blocks, Karoon six and Equinor only one. This result reaffirms the important and persistent exploratory potential of the region in the coming years.

In the Parecis basin, the only one with onshore blocks, only one of the 21 available blocks was purchased by the Brazilian company Dillianz. A newcomer to bidding rounds, Dillianz has activities linked to agribusiness, finance, real estate and photovoltaic energy. In turn, the Potiguar basin did not receive any bids for any of the 16 available blocks.

Two points are worth highlighting in the auction. The first refers to the record collection of signing bonuses and the second is the industry's appetite for the Foz do Amazonas Basin, now that Petrobras is about to license exploratory activities in the region.

The amount collected in subscription bonuses in the 5th Permanent Offering Cycle of concessions was R$989.2 million. This is the highest collection compared to previous cycles, since 2019. The amount is more than double that recorded in the 4th cycle, which until then had been the one with the highest collection, with R$421.8 million. This amount meets the short-term collection interests of the Brazilian State. However, it results from a hasty and non-social dialogue decision by the ANP, in addition to representing the price of selling the country's energy sovereignty to multinational oil companies.

The high value of the signing bonus is directly related to the blocks auctioned in the Foz do Amazonas basin. In total, R$844.3 million was paid by the oil companies for the 19 blocks auctioned in the basin. This amount alone is twice as high as the total collected in the 4th OPC cycle, and represents approximately 85% of the total collection in bonuses in this 5th cycle.

These figures for the mouth of the Amazon demonstrate the appetite of oil companies, especially the major ones, for the basin and, at the same time, reaffirm its high potential. Studies by EPE estimate the possibility of recoverable reserves of around 10 billion barrels in the region. Therefore, continuing to approach the mouth of the Amazon and the other basins of the Brazilian Equatorial Margin as a common exploratory frontier could be a passport for the country to hand over its energy potential to private interests, without any major commitments to the socioeconomic and environmental development of the North and Northeast regions of Brazil.

Thus, the auction result reinforces the thesis defended by Ineep that the basins of the Brazilian Equatorial Margin need to be considered strategic and should therefore be regulated by the sharing regime. This measure would ensure greater State presence and control over exploration and production operations and oil revenues, in addition to strengthening Petrobras as a driver of regional and national social and economic development.

In short, it is essential that Brazil expand its oil and gas activities to new frontiers, aiming to replenish its reserves and guarantee its future energy security. However, this movement needs to be carried out in a coordinated manner, in order to ensure economic, social and environmental gains for the Brazilian people. This involves classifying the Brazilian Equatorial Margin as a strategic area and strengthening Petrobras, which was not done in the current auction.