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Page added on October 9, 2015
Historic Failure For Brazilian Oil Auction
Brazil just held an oil and gas auction, and judging by the results, few companies are interested in developing the country’s oil and gas reserves right now.
The state-owned oil company Petrobras, which is still reeling from the corruption scandal, did not participate in the auction. The unusual absence was due to the company’s massive pile of debt. Petrobras has limited resources to throw around these days, and it can ill-afford to take on new projects that would require large capital expenditures upfront, with payoff somewhere down the road.
However, there was scant interest from international oil companies as well. Brazil’s oil auction failed to attract any oil majors, including Royal Dutch Shell, Total, Statoil, ExxonMobil, or BP, all of which either have a presence in Brazil or were registered to bid in auction.
Out of the 266 onshore and offshore blocks that were put up for bid, only 37 were successfully awarded to companies, the worst result in years. The bids brought in just 121 million reals (around USD$31 million). Worse, six of the ten basins that were offered received no bids at all, including the much-hyped Campos Basin off the coast of Rio de Janeiro, as well as the Camamu-Almada basin off the coast of the state of Bahia. The largest bid was for a block north of Bahia, offshore of the state of Sergipe, but the winning bid, from the Brazilian company, QGEP Participações SA, came in at the minimum price allowed.
“We sold 14 percent of the blocks which is a fair bit below what we were hoping for,” Magda Chambriard, an official with Brazil’s oil regulator, told Reuters.
In a departure from the past, none of the successful awards occurred in Brazil’s prolific pre-salt, the vast reserves of oil trapped beneath a thick layer of salt in deepwater. Excitement around the huge potential of the pre-salt is what has driven the immense interest in Brazil’s oil sector over the past decade. But, due to the high costs of development, developing pre-salt oil fields makes little sense when oil prices are so low.
“The feeling is one of frustration,” Aluizio Dos Santos, the president of the Organization of Oil Producing Municipalities, told Reuters while at the auction in Rio de Janeiro.
The results were undoubtedly worse because of Petrobras’ absence. In the past, the state-owned oil firm has accounted for more than half of the successful bids. This is the first time in history that Petrobras did not bid at all.
Another reason that some analysts believe that interest was so tepid was because of local content rules. Brazil requires a certain amount of equipment for oil projects come from local providers, rather than imported from abroad. Oil companies argue that this raises the cost of development.
It wasn’t just offshore blocks that Brazil’s government auctioned off. Controversially, Brazil was also auctioning blocks in the Amazon Rainforest, including across indigenous territories. The move is being met with protest from environmental and indigenous groups. The lack of interest from the oil industry, however, could make the issue a moot point, at least for now. There wasn’t nearly as much interest in drilling as feared. Environmental groups are still incensed that the government is willing to open up the rainforest for drilling however, and if oil prices rebound and drillers express more interest in the Amazon, conflict will escalate between environmental and indigenous groups on the one hand and the oil industry on the other.
The disappointing results came just as Mexico is experiencing similar trouble in attracting interest from international oil and gas companies. Low oil prices and mounting debt are deterring drillers, as few have extra cash that they are willing to risk on new projects. The poor showing in Brazil could prompt changes in rules, such as a reduction in the local content requirement.
The failed auction will dim Brazil’s chances of significantly increasing oil production. Already, Petrobras has had to dramatically lower its long-term production estimates. But the abysmal financial state facing the company, combined with the ongoing corruption investigation, are forcing more restraint. In fact, Petrobras’ share price rose on the news that it made no bids at all. Shareholders are clearly pleased that the company won’t be spending any more money on drilling.
Related: LNG Bust Could Last For Years
(Click to enlarge)
Figure 1 Blocks Up for Auction in Dark Orange
By Nick Cunningham of Oilprice.com
36 Comments on "Historic Failure For Brazilian Oil Auction"
shortonoil on Fri, 9th Oct 2015 7:34 am
At $50/barrel no one wants oil in 12,000 feet of water under 2,000 feet of salt.
Go figure?
How much more to the world’s oil resource just got taken off the reserve list? Declining price means less reserves; a lot less! At $25 that means about 300 Gb!
http://www.thehillsgroup.org/
orbit7er on Fri, 9th Oct 2015 8:46 am
This seems like a good opportunity for Climate Change Billionaire activists to buy up these leases and keep them from being drilled forever! Where are you Tom Steyer?
makati1 on Fri, 9th Oct 2015 9:34 am
orbit, or they can just let them die. I doubt that they will ever be used. The cost will exceed the ability to make a profit in the world we are moving into.
rockman on Fri, 9th Oct 2015 11:54 am
Orbit – Companies don’t “buy” leases. They lease them…thus the term “lease”. LOL. What a company acquires is the right to drill and produce a lease. Don’t drill or produce it on schedule the lease and the money paid for it is forfeited. The govt can then lease it to the next company. I suppose someone could try to buy the mineral rights and hold them forever. But that would cost hundreds of $BILLIONS for just a portion of offshore Brazil.
Perhaps you could start a collection.
Fabio on Fri, 9th Oct 2015 2:27 pm
shortonoil wrote:
“At $50/barrel no one wants oil in 12,000 feet of water under 2,000 feet of salt.”
Get your facts straight. Pre-salt basins were not part of this auction.
As for pre-salt attractivenes at $50 oil, Shell recently paid $ 70 billion for BG mainly because of its pre-salt assets at the Santos basin.
BobInget on Fri, 9th Oct 2015 7:17 pm
Fabio the spoiler, wants us to look closer, do DD, stick to facts. We don’t do facts, just opinions.
Seriously though, drilling in the Amazon, ultra deep water, is too expensive at today’s prices.
That can and doubtless will change.
Technology will find a way to extract the last drop, someday. In the mean time, we need to feed ourselves, demand continues its upwards curve with not a single new ‘elephant field’ in production.
Evidence, dividends NOW, today, supersedes future production.
” Shareholders are clearly pleased that the company won’t be spending any more money on drilling”.
shortonoil on Sat, 10th Oct 2015 7:45 am
“Get your facts straight. Pre-salt basins were not part of this auction.”
Quess this auction wasn’t in ultra deep water either?
“As for pre-salt attractivenes at $50 oil, Shell recently paid $ 70 billion for BG mainly because of its pre-salt assets at the Santos basin.”
Shell paid $70 billion for wells that were already drilled, and producing; which has absolutely nothing to do with Brazilian ultra deep water. What is your point, that drilling through a few thousand feet of salt, that’s under a few thousand feet of water is a picnic. Shell’s main interest in acquiring BG was to shore up their deteriorating reserve book. The one that has been in decline since Phil Watts had to admit that Shell’s reserves were 20% less than stated. That was in 2003. Shell is buying reserves, not pre-salt basins. Whether, or not they turn out to be profitable is the question?
shortonoil on Sat, 10th Oct 2015 8:16 am
“Seriously though, drilling in the Amazon, ultra deep water, is too expensive at today’s prices.
That can and doubtless will change.”
That will undoubtedly not change! The economy can not afford high priced oil, and grow. High priced oil slows the economy, and demand falls. Demand falls, and the price declines to compensate. This is what is happening:
http://www.thehillsgroup.org/depletion2_022.htm
Every barrel of oil that has ever been extracted required, on average, a little more energy to extract than the barrel that came before it. The cost to extract it went up with that energy. It has now gone up high enough that the industry can no longer afford to replace the reserves that are being extracted. When the fields now producing have been depleted out, the industry, and the oil age ends.
Boat on Sat, 10th Oct 2015 8:25 am
short,
As usual, your full of it. US and the world did just fine at $100 oil. did you see the world go bust? There is a plethora of oil out there at less than $100 per barrel. Right now we are filling our piggy banks with cash for the next cycle of high priced oil. Soon we will be buying that $30,000 electric car.
Boat on Sat, 10th Oct 2015 8:33 am
short,
As far as future production goes and where it can come from.
What could the oil industry achieve if restrictions on oil drilling in the United States were lessened? The American Petroleum Industry commissioned a study that assumed oil drilling would be allowed off the currently prohibited areas of the East and West Coasts, in waters off Florida’s Gulf Coast, in Alaska’s Arctic National Wildlife Refuge, and on most federal public land that is not a national park. It also assumed that it would get approval to build pipelines to accommodate a doubling of Canadian oil sands production and the continuation of the tax policies currently in place for the oil industry.[xix]
The API commissioned the study from energy consultants Wood Mackenzie, who found that domestic production of petroleum liquids would increase from 7.8 million barrels per day in 2010 to 9 million barrels per day in 2030 under current policies due to increased production from shale oil and deepwater drilling. However, if the industry could meet the assumptions of the study, domestic liquids production could reach 15.4 million barrels per day close to the 19 million barrels a day that we currently consume. That would create 1 million new jobs over the next seven years and 1.4 million by 2030. The industry already supports more than 9 million jobs throughout the economy. The study indicates that the United States can come close to producing enough new oil and natural gas to displace all non-North American imports within 15 years. More than $800 billion in cumulative new government revenue could be generated by 2030 and $127 billion by 2020 – equal to about two and a half years’ worth of current federal spending on roads. Most importantly, no new taxes or increased government spending is needed to accomplish the results of the study.
http://instituteforenergyresearch.org/studies/new-oil-finds-around-the-globe-will-the-u-s-capitalize-on-its-oil-resources/
ghung on Sat, 10th Oct 2015 8:37 am
Boat; “US and the world did just fine at $100 oil.”
Sure, Boat, that’s why the global economy is on the verge of another credit meltdown, is seeing commodity deflation, and the Fed can’t raise interest rates even a few basis points. Doing just fine.
Boat on Sat, 10th Oct 2015 8:41 am
short,
Fracking
http://www.bloomberg.com/news/articles/2015-07-06/refracking-fever-sweeps-across-shale-industry-after-oil-collapse
world shale potential
http://www.eia.gov/analysis/studies/worldshalegas/
Sorry if reading about oil and nat gas doesn’t fit your narrative. Climate change may doom civilization but the production of oil and nat is not going away anytime soon.
Apneaman on Sat, 10th Oct 2015 8:47 am
Boat, who is we? Glencore? Caterpillar? Their former employees standing in the unemployment line with all the laid off oil patch workers?
When This Caterpillar Dies, We Don’t Get a Butterfly [UPDATE]
“In order to have an industrial economy you have to build industrial things — roads, ports, buildings, power stations and their grids, airports, houses and shopping centers — and you have to replace them when they wear out. Such building is the activity on which an industrial society rests, the primary source of jobs and all the consequent economic activity that flows from people with jobs. What every one of these building projects needs, in addition to capital and workers, is heavy machinery. That is why the health of Caterpillar, the world’s dominant manufacturer of heavy equipment, and to a lesser extent England”s JCB, are taken as precursors of the world’s financial health.
Call hospice.
It’s bad enough the Caterpillar’s world sales were down 11% year-to-year in August, worse that they have declined by a similar amount every month this year. What is truly awful is that Caterpillar has a string of such sales declines — on average 10% per month — going back almost three years. It’s the longest stretch of sales declines in the history of the company. To those who regard Caterpillar as a bellwether, and it has been reliable in the past, our future is going to be called the Second Great Depression.”
http://www.dailyimpact.net/2015/09/23/when-this-caterpillar-dies-we-dont-get-a-butterfly/
Payday loans, Obama Care, subprime auto loans and reverse mortgages – that it buddy – running on fumes. Thousands of workers a day have been getting laid off from some of the worlds biggests companies and it ain’t finished. Your a blind fool boat. Go find a happy freddy fluff chart to whack off to.
Oh, I forgot, Climate Disaster clean up companies are booming.
Boat on Sat, 10th Oct 2015 8:48 am
Ghung,
You may attribute a meltdown that hasen’t happened yet to the price of oil, lol, but maybe it has more to do with debt from wars and military spending over decades. Not to mention social programs that spend billions on the back of debt.
As usual you doomers like to pick a poison to blame when the picture is not that clear. Increased population another factor maybe that is running above sustainability.
Boat on Sat, 10th Oct 2015 8:55 am
apeman,
What happened? Did another fire jump a road? Fear of an economic cycle got you down? Since your unemployed fill out a resume for the boy who called wolf.
PS on another note BC predicted a total crash in 6 months. 4 months and 2 weeks left. Buy your ice cream now fat man. Lean times are coming.
marmico on Sat, 10th Oct 2015 8:55 am
Slower Growth in Emerging Markets, a Gradual Pickup in Advanced Economies July 2015
Boat on Sat, 10th Oct 2015 9:03 am
Global growth is projected at 3.3 percent in 2015, marginally lower than in 2014, with a gradual pickup in advanced economies and a slowdown in emerging market and developing economies. In 2016, growth is expected to strengthen to 3.8 percent.
A setback to activity in the first quarter of 2015, mostly in North America, has resulted in a small downward revision to global growth for 2015 relative to the April 2015 World Economic Outlook (WEO). Nevertheless, the underlying drivers for a gradual acceleration in economic activity in advanced economies—easy financial conditions, more neutral fiscal policy in the euro area, lower fuel prices, and improving confidence and labor market conditions—remain intact.
In emerging market economies, the continued growth slowdown reflects several factors, including lower commodity prices and tighter external financial conditions, structural bottlenecks, rebalancing in China, and economic distress related to geopolitical factors. A rebound in activity in a number of distressed economies is expected to result in a pickup in growth in 2016.
The distribution of risks to global economic activity is still tilted to the downside. Near-term risks include increased financial market volatility and disruptive asset price shifts, while lower potential output growth remains an important medium-term risk in both advanced and emerging market economies. Lower commodity prices also pose risks to the outlook in low-income developing economies after many years of strong growth.
From marmico’s link. 3.3% global growth in 2015 growing to 3.8% in 2016.
Predictions are just that but safe to say unless there is a geopolitical event no big crash in the near future.
Also short term I fear is the wonderful price of gasoline. $1.87 my last fill up. I drive less now to do my part to extend the glut. I challenge everyone to do the same.
ghung on Sat, 10th Oct 2015 9:09 am
Boat; “Ghung,
You may attribute a meltdown that hasen’t happened yet to the price of oil, lol..”
I attribute overall economic decline, and attempts to mask that using risky and fraudulent monetary policies, to a deeply systemic set of conditions led by resource depletion and too many claims on said resources from economies that have been robbing Peter to Pay Paul’s energy bills. It isn’t about peak oil; it’s the early onset of peak affordability of everything that drives a healthy economy. Petroleum, being the primary commodity it is, has received a lion’s share of that fraudulent financing (debt that will never be repaid). Why would that be if it’s so economically abundant?
BTW: “lol” went out with flip phones.
Apneaman on Sat, 10th Oct 2015 9:10 am
Boat you mean those fires that destroyed millions acres of forests and 3000 homes and a bunch of businesses? No this time it’s half an ocean’s worth of record breaking deluge on South Carolina with at least 14 dead and homes, businesses and infrastructure damaged and destroyed. The new normal….until it gets even worse.
South Carolina’s rain and floods, by the numbers
“ods have done to their states.
As of Monday afternoon, when the worst of the rain stopped, the National Weather Service said rainfall totals in the hardest hit areas in South Carolina had received more than 2 feet of rain since last week.”
“The South Carolina town hit by the most rainfall, Mount Pleasant, got almost 27 inches, according to the weather service. A total of about 11 trillion gallons of water had fallen across North and South Carolina combined. More rain is coming this weekend, forecasters said Thursday.”
“The death toll in South Carolina from the floods was 17 and two in North Carolina as of Thursday.
South Carolina Gov. Nikki Haley listed some other numbers in a few separate press conferences over the last few days:
40,000 households had no running water, 26,000 had no electricity as of Monday.
State highway patrol officers have responded to 4,926 service calls over the last several days.
2,122 of those calls have been responses to vehicle collisions.
There are 3,000 National Guardsman in the state, and that number will increase to 5,000 Haley said Wednesday.
600 people and hundreds of pets had been rescued.
824 people were in shelters as of Wednesday.
13 dams had failed, and 62 were being monitored.
74 miles of interstate highway were closed as of Tuesday.
“It appears to be an absolute certainty that the final damage bill is going to be above $1 billion, but until the waters fully recede and homeowners and businesses can take a complete assessment of the damage, we won’t know for sure,” said Steve Bowen, a meteorologist for Aon Benfield.”
http://www.cnbc.com/2015/10/08/south-carolinas-rain-and-floods-by-the-numbers.html
Apneaman on Sat, 10th Oct 2015 9:30 am
“Global growth is projected at 3.3 percent in 2015”
When is it not?
Let’s Talk Global Recession — Serious Danger!
“The global economy is teetering on the brink of recession, or maybe it’s already in recession.
A few people are talking about it—I’ll get to them in moment—but nobody seems to care, at least in the United States. Let’s start with those puzzled optimists at the IMF.
The International Monetary Fund is worried. That’s not just because it has shaved its growth forecast for 2015 for the second time in six months. It is not even that the world economy is expected this year to post its weakest performance since it completely stalled in 2009.
Rather, it is because the global economy continues to under-perform. Every year, economists at the fund predict that recovery is about to move up a gear, and every year they are disappointed. The IMF has over-estimated global growth by one percentage point a year on average for the past four years.
That’s a chunky forecasting error, especially in the light of all the factors that should have been boosting activity – interest rates at all-but zero, oodles of money creation through quantitative easing programs and, more recently, tumbling oil prices.
As a result, the fund is now doing some head-scratching in order to determine whether this persistently weaker than predicted performance is a temporary phenomenon caused by a particularly deep recession or something more permanent.
And what are the latest growth projections of the IMF? CNBC gives us the numbers.
The $73.5 trillion global economy is expected to grow 3.1 percent in 2015 and 3.6 percent in 2016, according to the latest International Monetary Fund projections.
Those numbers, though, are heading lower and could be revised even more before all is said and done…
The IMF did it again! Next year is always better than this year. It’s not easy for humans to climb aboard the clue train.
A global recession is not like a recession in a specific country, as CNBC explains.
On a global scale, though, the [recession] standard is different. Absolute growth less than 3 percent, or GDP adjusted for market exchange rates below 2 percent, is generally good enough to call a recession.
By either measure, the world is teetering on the line, with 2015 adjusted growth pegged at 2.5 percent and 2016 at 3 percent.
And in my humble opinion, if the IMF is taking China’s official growth numbers at face value, then the global economy is likely already in recession according to the common definition (Financial Times, September 28, 2015). This sentence in the FT report is priceless.
For China and other governments for whom economic growth is the main guarantee of political legitimacy, the temptation to fudge will always exist.
The temptation to fudge? Oh, my! Did I mention the clue train?”
more
http://www.declineoftheempire.com/2015/10/lets-talk-global-recession-serious-danger.html
shortonoil on Sat, 10th Oct 2015 9:34 am
“short,
As usual, your full of it. US and the world did just fine at $100 oil. did you see the world go bust?
Total world debt has increased by 40% since 2008. The richest oil producing nation on earth now has to borrow money to pay its bills. The Bell Weather for world industry, Caterpillar, has has seen its sales decline for 19 months in a row. The world’s largest steel manufacture has now filed bankruptcy.
You are lying to yourself, or to the world; or both. Your stupid, transparent agenda is nothing more than a tattered sheet of paper blowing in the wind. Your insistent proclamations that all is well is falling on deaf ears! Even the greater fool no longer hears you!
Davy on Sat, 10th Oct 2015 9:37 am
Boat, you are starting to appear desperate with the multiple comments that are not saying anything of substance. Why can’t the Fed normalize? Why is the rate of growth not growing? You do realize there is a minimum operating level of growth that is needed and without it deflation is a danger. I might add a growth level that goes up over time as more complexity develops and is needed to combat entropic decay and compounding problems. Deflation with the amounts of debt and unfunded liabilities currently in the world is just not sustainable for very long. The burden is on you cornucopians to sustain the unsustainable. We doomers are tigers waiting to feast on you corns who are a wounded gazelle.
Boat on Sat, 10th Oct 2015 9:43 am
apeman,
I don’t trust stats anymore than you do. That is why I always like to wait for revisions. I do wonder why there is more optimization in the initial reporting and it seems more than 50% stats get downgraded rather than upgraded.
But, economies aqlways have cycles due to regulations not keeping up with greed. Why governments don’t require more capital in reserve for bad times is a mystery to me. There should be more regulation when it comes to accumulated debt also and wind these companies down when they reach a certain level where the investor doesn’t lose as much. It is still the wild wild west out there.
This is why I invest only in the s%p 500. Low fees and the fund does as well as the general economy with much diversity.
As climate change takes it’s toll on resources the game will slowly change but IMO that will still take a couple of decades. See we can have a difference of opinion withut insults. Amazing.
shortonoil on Sat, 10th Oct 2015 9:51 am
“By either measure, the world is teetering on the line, with 2015 adjusted growth pegged at 2.5 percent and 2016 at 3 percent.”
The point that the MSM misses, continually, is that anything less than 3% (maybe higher) is not enough growth to service the debt that already exists. We now have a pyramid growing Ponzi scheme at work that must eventually fail.
That is what happens when an entire civilization is powered by one irreplaceable, and depleting commodity. A time comes when the wheels stop turning!
Boat on Sat, 10th Oct 2015 9:52 am
short,
the Saudi have lost 68 billion the last time I read. Borrowed 40 billion. But have 600 billion left in reserves. I wish I had those problems.
Apneaman on Sat, 10th Oct 2015 10:01 am
There was plenty of regulations put in place after the crash of 1929, but most of them have been legislated away now. Corporate personhood? WTF! Which is why there are so many parallels to that period, only it’s worse. What regulation is left, is ignored because of corruption, capture and group think. After 29 there were only a couple billion people and much low hanging unexploited resources so they were able to climb out and grow. That cannot happen again. It was a one time build out and consumer orgy – the most expensive one ever.
Boat on Sat, 10th Oct 2015 10:05 am
Bernie Sanders and Elizabeth Warren are two of the democratic stars of the party and regulation is one of their priorities. The Frank Dodd legislation did make some progress but not enough. At least one party in the US is trying.
shortonoil on Sat, 10th Oct 2015 1:57 pm
“short,
the Saudi have lost 68 billion the last time I read. Borrowed 40 billion. But have 600 billion left in reserves. I wish I had those problems.”
What part of “no more” don’t you comprehend. The world’s oil fields are almost depleted out. We are burning it more than three times faster than it is being discovered. No one is making money pumping oil. With 28 million mouths to feed that 600 billion is not going to last very long. You wish you had “those problems”; in five years you will!
Boat on Sat, 10th Oct 2015 3:37 pm
short,
Lots of people are making money selling oil. And who says people need their governments to feed them. When you go from 4 million people in 1960 to 30 million in 2015 I would say sex without protection is the problem. Or immigration. Those are fixable problems. Here are some condoms, sorry no free gasoline or food, we have a budget now. Problem solved.
With 28 million mouths to feed that 600 billion is not going to last very long.
Fabio on Sat, 10th Oct 2015 5:29 pm
shortonloil wrote
“What is your point”
Point is, if pre-salt fields had been auctioned, CNPC, CNOOC, Shell and Total would have jumped in just like they did with Libra, regardless of the “futures” oil market, the same market that currently considers the US dollar a safe haven.
Unlike the blocks that have been auctioned last week, pre-salt fields have no exploratory risk, as all the big boys have “found” access to the seismic and it’s literally an ocean of oil.
The investment cycle is huge, but so are the columns. That oil will keep flowing for decades to come, being sold for a price much higher than today’s, as we pass over to the other side of the world’s output curve.
Apneaman on Sat, 10th Oct 2015 6:01 pm
Fabio, why haven’t pre-salt fields been auctioned?
GregT on Sat, 10th Oct 2015 8:40 pm
Boat said:
“This is why I invest only in the s%p 500. Low fees and the fund does as well as the general economy with much diversity.”
The S & P 500 is down 2.14% year to date. So yah, probably doing about as well as the general economy really is.
http://money.cnn.com/data/markets/sandp/
If you believe the official inflation stats Boat, congratulations, you just lost around 4.5% of your investment. Not bad in todays crumbling economy. Many have done much worse.
Boat on Sat, 10th Oct 2015 8:58 pm
GregT,
If you don’t look at investing at least 10 years out never do it. I never worry about losing. When the market drops I just get more shares for the dollar. Thats how dollar cost averaging works.
GregT on Sat, 10th Oct 2015 9:12 pm
Boat,
Good luck to you. I doubt very much that there will be a market left for to lose more of your money in, 10 years from now. Your little pieces of paper will be worth-less.
And just for the record Boat, there is a reason why I am retired at 53, and you are not. I have done very well with managing my portfolio.
shortonoil on Sun, 11th Oct 2015 2:58 am
“Point is, if pre-salt fields had been auctioned, CNPC, CNOOC, Shell and Total would have jumped in just like they did with Libra, regardless of the “futures” oil market, the same market that currently considers the US dollar a safe haven.”
Apparently you aren’t paying attention. The ROI of the majors has fallen from over 20% per year a decade ago to less than 8% today. They just can no longer afford high cost production environments, and Brazil is ultra deep, salt layered high cost. It is oil that can not be produced at $50. Shell, Total and etc. aren’t going to jump onto anything! Their main concern is now being able to borrow enough money to pay their dividends, and to buy more of their own stock back. The days of high priced oil are over, and they know it. They know it, we know it; how come you don’t?
http://www.thehillsgroup.org/
Fabio on Sun, 11th Oct 2015 11:40 am
Apneaman,
“why haven’t pre-salt fields been auctioned?”
Because, according to current brazilian law, the only company that can operate a pre-salt oil field in Brazil is Petrobras, and with a stake of at least 30%. And Petrobras’ backlog of fields being brougth online already demands huge investment, given the extremely long cycles involved.
BTW, there’s been powerful lobby (through congressmen that eat from the hands of Big Oil) to change not only the law that obliges Petrobras to be the sole operator, but also the production model from the current “production-sharing”, implemented and defended by the current ruling party, to “concession”.
If you google “impeachment Dilma” you’ll get all sorts of reasons for the current government-change movement, but of course that’s all smoke and mirrors for the sheep. Once again, it’s actually all about the oil.