Negative price trends in the oil industry and some conditions unique to Brazil’s turbulent economy were blamed for the huge snub delivered to the country’s latest oil field auction, according to Bloomberg and Reuters.
Several of the blocks on offer by state regulator the National Petroleum Agency were for offshore prospects but the take-up was very poor with only 37 of the 266 exploration blocks bought.
Most of the deep-water blocks, where it is more expensive and time consuming to develop fields, were not sold.
By and large, major international players avoided bidding at the auction and, tellingly, even Brazil’s state-run Petrobras did not make a bid, bogged down as it is in controversy and a huge debt burden.
Petrobras was not alone, though, as Statoil, Shell and Total also declined to bid, leaving the field open to smaller, mostly Brazilian, companies.
Some experts blamed uncertainty about Brazil’s regulatory environment for the lack of commitments by producers.
The Petrobras bribes-for-contracts scandal and concerns about excessive government interference in the industry could pull the regulatory pendulum in either direction.