1,100 blocks of oil and gas will be offered in auctions to foreign capital
Leer en español: América Latina: récord de subastas petroleras
This year, 7 Latin American countries will be competing for foreign capital in the largest number of rounds of bidding for exploration and production of the oil sector in the history of the region. Faced with financial constraints and the absence of adequate technology to exploit their reserves, several Latin American countries have opted to facilitate access to large oil companies and attract private investment, even if that represents lower profits for their governments.
Leja em português: América Latina: número recorde em leilão de petróleo
Historically, oil-producing countries in Latin America maintained regulations in the energy sector that gave the government and state-owned companies full control over oil reserves. However, given the inefficiency of this model, several Latin American countries have carried out free market reforms that encourage the participation of large foreign companies in the exploration and exploitation of energy resources.
According to Reuters, "the striking regulatory changes in Latin America include tax exemptions, trimmed royalties, longer contracts, flexible rating terms, and relaxed compulsory exploration programs that would allow companies to withdraw from projects that are not more easily successful than in last".
In this context, 7 Latin American countries will carry out at least 15 tenders with which close to 1,100 blocks of oil and gas will be opened to foreign capital.
In the first quarter of the year, Mexico attracted more than $ 100 billion in investment pledges through two rounds of auctions. The Central American country plans another two rounds in the second half of 2018, one in July and one in September. However, the outlook could change depending on the outcome of the presidential election on July 1.
During the last week of March, Brazil managed to raise $ 2,428 million dollars in the first auction of the year. The largest economy in the region is preparing for a second round of bids in June of this year.
At the end of March, the receipt of letters of investment interest in Ecuadorian oil and gas fields ended. According to information from the National Government, it is estimated that the contracts resulting from the auctions will generate an approximate investment of $ 800 million dollars.
This month, 15 oil blocks have been put on offer and another 25 areas are expected to be awarded during the month of May in Colombia. According to Orlando Velandia, president of the National Hydrocarbons Agency (ANH), "Colombia's priority is to develop (resources) offshore."
After a failed bidding call in 2017, Petróleos Paraguayos will launch an auction in the second quarter of the year to allocate the exploration and development of two areas in the west of the country.
Although the terms for the first round of negotiations have not been announced yet, Argentina plans to make them public in July to hold an auction before the end of 2018.
This week ended the deadline for the submission of documents for the qualification of oil companies and the Ministry of Industry, Energy and Mining plans the opening of bids for April 26, 2018.
Latin American Post | Paula Bautista
Translated by "América Latina organiza número récord de subastas petroleras en el 2018"