Petrobras under pressure from shareholders to exclude 14 blocks from 17th Bidding Round

Brazil’s national oil company (NOC) Petrobras has been asked by a group of shareholders to eliminate more than a dozen offshore blocks from the roster of sites included in the 17th Bidding Round, a set of auctions scheduled to take place on October 7.

The group in question is Anapetro, an association formed by Petrobras employees who own stock in the NOC. In a public letter, the association urged Petrobras to reduce the number of offshore blocks in the 17th Bidding Round from 92 to 78.

It explained its request by noting that it had singled out 14 blocks that lie within environmentally sensitive areas. These areas include the Abrolhos archipelago, which is home to many coral reefs, and the Fernando de Noronho archipelago, they said. (The Fernando de Noronho islands lie within the Potiguar basin, off Brazil’s north-eastern Pernambuco State, while the Abrolhos islands lie offshore Bahia State in the Campos basin.)

The letter quoted Mario Dal Zot, the president of Anapetro and the head of judicial affairs at Brazil Oil and Gas Workers Unified Federation (FUP), the country’s largest union of oil workers, as saying that Petrobras did not have a strong enough justification for including these 14 blocks in the auctions. “Participating in this auction is reckless, given its judicial and environmental fragility and also the effective risk to Petrobras’ image,” he said.

Dal Zot’s mention of judicial challenges to the bidding round may have been a reference to Brazilian federal prosecutors’ announcement in 2019 that they were reviewing the legality of the government’s decision to include blocks adjacent to the Abrolhos archipelago in a previous licensing round. Because of the legal dispute, the blocks in question failed to draw any bids.

As of press time, the NOC had not responded to Anapetro’s letter. Petrobras has already received expressions of interest (EoIs) in the 17th Bidding Round from a number of international oil companies (IOCs), including Chevron (US), Ecopetrol (Colombia), Karoon Energy (Australia), Murphy Oil (US), Royal Dutch Shell (UK/Netherlands) and TotalEnergies (France).

The upcoming bidding round covers 92 blocks in four separate sedimentary basins – Campos, Pelotas, Potiguar and Santos.