End of pre-salt monopoly is good news for Brazilian marketNews // October 19, 2016
Nor-Ocean Offshore says it believes a recent decision by Brail's Congress to end Petrobras' monopoly as operator of the 'pre-salt' fields is good news for the market there.
“Although expected for some time, we believe this change is a very important step in the right direction for the Brazilian oil and gas industry,” said Nor-Ocean Offshore, part of Arctic Securities. It noted that the now defunct rule had adversely affected growth and productivity from long before the oil price started to drop in 2014.
“Liberalization will, in our view, increase interest and investments from foreign E&Ps in pre-salt fields, which are known to be very attractive resources,” said Nor-Ocean Offshore, which expects more interest in the upcoming license round and possible divestments from Petrobras when it comes to its pre-salt assets.
Nor-Ocean Offshore says there are around 25 international oil companies (IOCs) in Brazil who are the most likely candidates to increase their stakes. Increased activity from IOCs, and a more competitive landscape between oil companies, should be very positive for the oil service industry in the long-term, it concluded.
Things are changing fast in Brazil these days, and lower local content requirements and the end of Petrobras’ monopoly in pre-salt fields are important steps to revitalize Brazil as the world’s most important deepwater market. “We expect to see further asset transactions and more interest from majors and IOCs in the coming years, and as such we are turning more bullish on Brazil longer term,” Nor-Ocean Offshore concluded.