Exxon, BP and BG Decline to Bid for Brazil’s Biggest Field

Three of the world’s top 20 oil companies by market value didn’t submit bids for Brazil’s largest oil field amid lower-than-expected interest in the deposit, the head of the country’s oil regulator said.

Exxon Mobil Corp. (XOM), BP Plc (BP/) and BG Group (BG/) didn’t register for the Libra field before yesterday’s deadline, Magda Chambriard, the head of Brazil’s oil regulator, told reporters in Rio de Janeiro today. The number of participants was less than half of the more than 40 companies expected by the regulator, Chambriard said. At least a dozen companies registered, she said.

While Exxon, BP and BG didn’t bid because of “company-specific reasons,” the trio are still interested in a presence in Brazil, Chambriard said, without elaborating. The companies called to inform her of their decisions, she said.

Brazil is auctioning Libra, estimated to hold as much as 12 billion barrels of recoverable crude, under a new model for the so-called pre-salt region where state-controlled Petroleo Brasileiro SA (PETR3) is guaranteed operating control of new projects. Libra will be auctioned under a profit-sharing model where Petrobras and its partners will give the government at least 41.65 percent of production after deducting enough output to cover costs. The government will choose the group that offers the most so-called profit oil.

‘Potential Opportunities’

“After reviewing this opportunity, we decided not to participate in the Libra bid round,” Patrick McGinn, an Exxon Mobil spokesman, said in an e-mailed reply to questions. “We continually look for new exploration and development opportunities around the world where we can leverage our experience and technology, and we look forward to evaluating potential opportunities in Brazil.”

BP and BG didn’t immediately reply to e-mails seeking comment. Exxon, BP and BG all won acreage in Brazil’s most recent auction in May when it sold onshore and offshore licenses on the coast of northeastern Brazil.

UBS AG expected “low interest” in the auction, analysts led by Lilyanna Yang said in a Sept. 4 note to clients. It will take until 2021 to start selling crude from Libra, about two years longer than ANP estimates, and higher-than-expected levels of natural gas at the field will increase extraction costs, the UBS analysts said.

To contact the reporters on this story: Peter Millard in Rio de Janeiro at pmillard1@bloomberg.net; Rodrigo Orihuela in Rio de Janeiro at rorihuela@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net

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