“We hope we have turned the page,” said Fernando Coelho Filho, the minister of mines and energy, at a news conference in Rio de Janeiro after the auction. “We want to promote a competitive exploration and production market in Brazil.” He added that the presence of Exxon Mobil and other international companies that had abandoned Brazil gave him reason for optimism.
But the outcome was a far cry from the potential that oil companies saw for Brazil a decade ago when huge offshore reserves were discovered. The price of oil at that time had climbed above $100 a barrel, political turmoil roiled North Africa and the Middle East, and oil companies sought new reserves in politically stable countries.
Brazil decided in 2010 to designate Petrobras as the sole operator in the prime offshore fields. Exploration plummeted as international companies looked elsewhere to produce.
Then came a frenzy of drilling in American shale fields that became accessible with horizontal drilling and hydraulic fracturing, methods designed to unlock hydrocarbons from hard rocks. A global glut and price collapse followed, making deepwater drilling expensive relative to other exploration activities, although prices are starting to revive.
To make Brazil even less attractive, Mexico, Guyana and several African countries have opened their rich deepwater fields to foreign companies, leading to expectations of new large-scale production over the next decade. And Petrobras, crippled by a series of corruption scandals, is now deeply in debt.
The auction follows a series of reforms started last year, dropping the designation of Petrobras as sole operator and lowering requirements…