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Second take in Brazil’s Surplus DRO licensing: borderline economics may limit interest again

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29 October 2021

Second take in Brazil’s Surplus DRO licensing: borderline economics may limit interest again

Report summary

On 17 December 2021, Brazil will relicense the surplus volumes in Atapu and Sépia. The two PSCs failed to attract bids in 2019. The 2021 licensing round terms offer two clear improvements compared to the previous round: reduced uncertainty and reduced entry costs. Still, it is an opportunity for consortia or those with deep pockets – upfront costs will sum to US$10.6 billion to access 1.6 billion barrels of 2P oil reserves.

Table of contents

    • Areas on offer
    • Improved licensing terms are not sufficient
    • Capital gain tax takes a bite out of contractor's profit

Tables and charts

This report includes 5 images and tables including:

  • Atapu returns sensitivity to Brent and profit share bids
  • Sépia returns sensitivity to Brent and profit share bids
  • Atapu cummulative cash flow sensitivity
  • Sépia cummulative cash flow sensitivity
  • Surplus Transfer of Rights bid parameters comparison: 2019 and 2021

What's included

This report contains:

  • Document

    Second take in Brazil’s Surplus DRO licensing: borderline economics may limit interest again

    PDF 837.55 KB

  • Document

    Second take at Brazil's DRO round_Tables and charts.xlsx

    XLSX 168.03 KB