Brazil to Hold Last Auction for Interests in Pre-Salt Areas

Credit: Shutterstock photo

Brazil is set to hold the fifth pre-salt round, which is likely to be the last auction prior to the presidential election in October.

Fifth Round Auction Details

The applications of six companies, which include BP plc BP , Royal Dutch Shell plc RDS.A and TOTAL SA TOT , were the first to receive approval from Brazil's oil regulator ANP for bidding in September 28. The auction includes four blocks under production sharing agreements (PSAs) in the pre-salt layer.

Other companies comprise China-owned CNODC, Germany's DEA Deutsche Erdoel and Qatar's QPI. BP, Royal Dutch Shell and TOTAL currently carry a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Of the six companies, only DEA Deutsche Erdoel does not have an exploration and production contract for oil and/or gas in Brazil. A total of 12 applications have been received by the regulator for the bid round and the remaining applications are expected to be evaluated in the next meeting.

The four blocks in the auction comprises Saturno, Tita, Pau-Brasil and Sudoeste de Tartaruga Verde. These blocks are located in the Campos and Santos basins.

This round is the last opportunity for oil companies to secure a stake in Brazil's coveted pre-salt areas, as the outcome of the presidential elections can transform the rules for future auctions.

The impending elections pose uncertainty over the future of Brazilian oil auctions regime. Some of the candidates in the election support the return of Petrobras, which is likely to boost development of Brazil's oil resources.

Reforms in Brazil's Oil Sector

A series of regulatory changes have piqued the interest of oil majors for deepwater blocks in Brazil. Earlier, Petrobras had to be selected as the managing company, which is not compulsory anymore. The number of Brazilian machinery and construction material required for exploration and production has been reduced. The changes came into effect when most oil majors were reluctant to invest in offshore blocks amid rigid regulations and price volatility.

In Brazil's fourth Production Sharing Round held in June, Exxon Mobil Corp. XOM was an aggressive bidder. Moreover, consortiums comprising BP, Royal Dutch Shell, Equinor ASA and Chevron Corp. won the rights to explore three blocks in the Santos and Campos basins, besides Petrobras.


Per the International Energy Agency, Brazil is likely to be the second-biggest contributor, after United States, to growing oil supplies outside the Organization of the Petroleum Exporting Countries in the next few years.

A major portion of the contribution is expected to come from offshore drilling. In a recent report by the agency, Petrobras along with other international oil companies will boost global supplies by more than a million barrels a day by 2023, exceeding 1% of the global market.

Will You Make a Fortune on the Shift to Electric Cars?

Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

It's not the one you think.

See This Ticker Free >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Exxon Mobil Corporation (XOM): Free Stock Analysis Report

BP p.l.c. (BP): Free Stock Analysis Report

Royal Dutch Shell PLC (RDS.A): Free Stock Analysis Report

TOTAL S.A. (TOT): Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Other Topics


Latest Markets Videos


Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at

Learn More