How oil auctions affect the O&G market

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How long did the interruption of oil auctions last and how to explain it? According to the expert, in relation to offshore areas , the interruption was, in practice, due to the discontinuity of the concession auction agenda. “This operating format deals with the offer of exploratory blocks on the Brazilian coast outside the pre-salt polygon and, mainly, by not holding an auction on the sharing blocks, these in the pre-salt, whose auction schedule has become effective from ”, comments Diogo. In other words, in a few words, the cooling of this agenda began in and only ended in . For Diogo, the interruption of the auction schedule during the period can be explained by the Federal Government's stance, which was not favorable to private capital investment in the sector, especially foreign capital. “This prevented the entry of new players, diverting the application from abroad to other countries, to the detriment of resources allocated in Brazil”, he argues.

As reported by Agência Brasil in the phone number data second half of , both oil and gas auctions contributed to the sector's industries experiencing a kind of recovery. In an interview with the portal, the general director of the National Agency for Petroleum, Natural Gas and Biofuels (ANP), Décio Odonne mentioned that the warming that the market experienced was, at least initially, concentrated in the pre-salt polygon. He also considered that the next challenge would be to attract investment in other exploratory areas that have not received the same attention in recent years. Also in this publication, José Pedro Firmo, president of the Brazilian Institute of Petroleum, Gas and Biofuels (IBP), drew attention to onshore exploration areas in mature fields. What were the main impacts? In Diogo's view, the interruption of auctions had a huge impact on the Brazilian O&G industry, generating discontinuity in the production and service chains and promoting a lack of investment. As a consequence, there was complete stagnation in the sector — the increase in the unemployment rate and the reduction in government funding represent this.



It is estimated that the industry lost around 360 thousand jobs between and , the most pronounced period of the crisis in the sector”, he points out. What to expect from the resumption of oil auctions? According to Diogo, it is possible to expect the resumption of investment by new oil operators. This would revitalize the production chain and, in the short and medium term, increase installed capacity and, consequently, generate more jobs and increase government revenues through royalties, etc. “In addition to the auction agenda, it is extremely important that other aspects are worked on by the Government with the sector, promoting legal security for investors”, ponders the Brasco manager. He also cites, as examples of this, the environmental licensing process, the attractiveness of the blocks offered, public policies, such as local content, among others. In short, auctions function as indispensable gears to keep the O&G market active.