The encyclopedia · Strategy & Leadership · Strategic decision · 2019
Brazil auctioned pre-salt oil by the share of future production, raising R$69.9bn
ANP's 2019 transfer-of-rights auction sold Búzios and Itapu for a slice of profit oil: R$69.96bn in signature bonuses.
Agência Nacional do Petróleo · Petrobras · CNOOC · CNODC
The solution
In 2010 the government had given Petrobras the right to produce 5 billion barrels from pre-salt fields without a tender, in exchange for shares. Surveys later showed the reserves were bigger — estimated at 6 to 15 billion barrels — leaving a valuable 'surplus' to allocate.
Brazil auctioned that surplus under production sharing, where the competition is not a cash price but the percentage of profit oil (óleo-lucro) offered to the state, above a floor set in the edital. Winners pay a pre-set signature bonus and later hand over their promised share of production.
On 6 November 2019, Búzios — with Petrobras (90%) plus CNOOC and CNODC (5% each) — was won at the 23.24% minimum with a R$68.19bn bonus, and Itapu by Petrobras at 18.15% for R$1.76bn. Sépia and Atapu drew no bids, but the R$69.96bn total was the biggest collection in ANP history.
Why it worked
- Paying in barrels aligns the state's revenue with actual production
- The profit-oil share competition reveals bidders' own valuation of the fields
- Signature bonuses delivered R$69.96bn upfront without a fixed-price sale
- Minimum shares in the edital protected the state even with no premium
What can be applied
When value is uncertain, auction a share of outcome, not fixed price: state gains if barrels flow, bidder's share reveals worth.
Aftermath
The proceeds were split among the federal government, states and municipalities, with cities directed to use their share for pension and investment spending. The two unsold fields, Sépia and Atapu, were re-offered in later rounds, and the production-sharing auction format became the standard for Brazil's remaining pre-salt areas.
Sources
- Megaleilão do pré-sal arrecada R$ 69,9 bilhões com duas das quatro áreas arrematadas
- Petrobras salva megaleilão do pré-sal, que tem bônus total de R$ 69,96 bilhões
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