As for the 6th Bidding Round on Thursday (7), it covered five “high potential” exploratory blocks in the pre-salt polygon and was billed as the last auction in a cycle of lower risk blocks with high signing bonuses. As such, many of the issues from the TOR auction likely remained on the minds of oil majors. Petrobras had exercised its right of first refusal on three of the five blocks, meaning winners would once again find themselves negotiating over operatorship.
In addition to the fiscal, regulatory and strategic constraints mentioned above, there were also technical issues that were certainly considered by the potential bidders. With the exception of Aram and SW Sagitário, the geological and geophysical data indicates that the offered blocks show reasonable prospectivity but with higher technical risk than the classical pre-salt province.
In the center of Santos Basin, the Aram and SW Sagitário blocks present the potential for high volumes with low exploration risk. However, the significant development risk cannot not be overlooked due to the high pressures and GOR in the area.
As for the Cruzeiro do Sul block, it is very low risk from an accumulation perspective, but the volumes are relatively small and there is a higher risk regarding CO2. Since the traps are smaller, the oil rim probably is not as expressive as in Jupiter, making the area even riskier in terms of discovering commercially viable oil volumes.
The SE Bumerangue block is even more challenging because of recent discoveries with high CO2 content, while the outboard of the Santos Basin is still not totally understood in terms of prospectivity.
For the Norte de Brava block, the issue is unitization with existing post-salt fields. Here it is also interesting to note the absence of a bid from Petrobras, which had exerted its pre-emptive right to operate the block. The area is essentially an extension of its existing blocks and the Brazilian oil major was most likely feeling cash flow pressures after the failure of the TOR auction.