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Evaluating Brazilian Bid Rounds: The impact of a plan to grant licences to optimize demand in the upstream sector

Evaluating Brazilian Bid Rounds: The impact of a plan to grant licences to optimize demand in the upstream sector
Evaluating Brazilian Bid Rounds: The impact of a plan to grant licences to optimize demand in the upstream sector

The Brazilian oil and gas (O&G) sector has huge potential to grow in the next few decades. Changes made by the Petroleum Law established the Brazilian Bid Round system to offer exploratory areas and to grant exploration and production (E&P) licences, resulting in the expansion of investment in E&P. Due to Petrobras' monopoly in the E&P sector until 1998, only a small portion of Brazil's sedimentary basins (SBs) have been explored, leaving a large amount of exploratory data to be acquired in poorly explored areas, where little knowledge about hydrocarbon potential is available. This article proposes a model to analyse Brazilian O&G policy decisions, based on historical data and Markov Chains. The model aims to support E&P area offers, taking into account the consequences of the demand for E&P goods and services. We apply the proposed model to Brazilian Bid Round contracts, and derive the optimal interval between Bid Rounds for SBs. The results suggest that the upstream sector in Brazil is impaired by the absence of a regular schedule for Bid Rounds, and will be improved with more predictability in exploratory offers.

1754-9957
235-256
Almeida, Bernardo F.
fd1d33cb-fc78-4936-a224-5c7479948830
Arruda, Edilson F.
8eb3bd83-e883-4bf3-bfbc-7887c5daa911
Almeida, Bernardo F.
fd1d33cb-fc78-4936-a224-5c7479948830
Arruda, Edilson F.
8eb3bd83-e883-4bf3-bfbc-7887c5daa911

Almeida, Bernardo F. and Arruda, Edilson F. (2017) Evaluating Brazilian Bid Rounds: The impact of a plan to grant licences to optimize demand in the upstream sector. Journal of World Energy Law and Business, 10 (3), 235-256, [jwx006]. (doi:10.1093/jwelb/jwx006).

Record type: Article

Abstract

The Brazilian oil and gas (O&G) sector has huge potential to grow in the next few decades. Changes made by the Petroleum Law established the Brazilian Bid Round system to offer exploratory areas and to grant exploration and production (E&P) licences, resulting in the expansion of investment in E&P. Due to Petrobras' monopoly in the E&P sector until 1998, only a small portion of Brazil's sedimentary basins (SBs) have been explored, leaving a large amount of exploratory data to be acquired in poorly explored areas, where little knowledge about hydrocarbon potential is available. This article proposes a model to analyse Brazilian O&G policy decisions, based on historical data and Markov Chains. The model aims to support E&P area offers, taking into account the consequences of the demand for E&P goods and services. We apply the proposed model to Brazilian Bid Round contracts, and derive the optimal interval between Bid Rounds for SBs. The results suggest that the upstream sector in Brazil is impaired by the absence of a regular schedule for Bid Rounds, and will be improved with more predictability in exploratory offers.

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e-pub ahead of print date: 14 June 2017
Published date: June 2017

Identifiers

Local EPrints ID: 444757
URI: http://eprints.soton.ac.uk/id/eprint/444757
ISSN: 1754-9957
PURE UUID: c9a674b8-16f7-464c-9b04-681374c9f389
ORCID for Edilson F. Arruda: ORCID iD orcid.org/0000-0002-9835-352X

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Date deposited: 03 Nov 2020 17:32
Last modified: 28 Apr 2022 02:31

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Author: Bernardo F. Almeida

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