My 1999

The maximum work obligation is a key investment parameter often used by oil companies in multinational oil and gas exploration, and determines the basic sunk cost of the exploration block.

In layman's terms, it means how much money an oil company will spend on block exploration after a successful bid.

And whether oil is found or not, the money must be spent.

The localized procurement ratio is the amount of equipment and services that oil companies must purchase locally, that is, in Brazil, during the exploration and development stages, as stipulated by the Brazilian Petroleum Regulatory Authority in order to solve local employment and promote the country’s economic development. proportion.

According to the regulations of the Brazilian Petroleum Regulatory Authority, the minimum localized procurement ratio in this round is 40%.

Of these, 15% are in the exploration stage and 25% are in the development stage.

If an oil company fails to meet this ratio, even if the bid is successful, it will have to accept heavy penalties.

Roberto Muric shouted after no offer superior to Shell's came out.

"I announce that it is the respected Shell Oil Company that has been awarded the exploration concession period of three years and the concession period of thirty-five years in the No. 1 oil block."

Wow...

Along with the applause, Shell and the small and medium-sized oil companies that formed a bidding group with it cheered loudly.

Representatives from other oil companies around them also cast envious glances at them.

Although Block 1 is not as high-profile as Block 2 and Block 6, it is also part of the shallow sea area of ​​​​the Santos Basin and has great hope of finding oil or natural gas.

"The franchise period given by the Brazilians this time is really long." Andrew said.

Generally speaking, a 30-year concession period for an oil field is considered long, and most of them are around 25 years.

Xu Liang smiled and said: "We have never found a big oil field. If we don't extend the concession period, how can we attract oil giants to invest?"

Capitalists are not believers.

After Andrew nodded, "Boss, the bidding for Block 2 is about to begin."

In fact, Xu Liang had already noticed it without him reminding him.

The surrounding atmosphere also instantly became a bit depressing.

Block 2 is a big hit.

"The next auction is for Block No. 2..."

The big screen in the middle flashed rapidly.

Quotations from oil companies flashed by.

After about half a minute, everyone could clearly see it.

Statoil, signing fee of US$18 million, maximum obligated investment of US$60 million, and 43% localized procurement ratio.

However, this condition did not last long and was replaced by Repsol Oil Company.

Spain's largest oil company quoted a signing fee of US$20 million, a maximum obligated investment of US$63 million, and the same 43% localized procurement ratio.

Unfortunately, although Repsol is strong, it is still far behind the real multinational oil giants such as ExxonMobil, Shell, BP, Delta, and ChevronTexaco.

As the saying goes, a good girl never has to worry about getting married.

The weaker Chevron, Texaco and Dauda were eliminated one after another, followed closely by Shell.

In the end, only ExxonMobil and BP were left competing against each other.

"That's it."

Xu Liangdao.

"Boss, do you really want to join?" Andrew hesitated.

Now the price of the No. 2 oil block has been raised by these oil giants to an astonishing level of a signing fee of US$45 million and a maximum obligated investment of US$86 million.

On the other hand, when it comes to localized procurement, everyone has a tacit understanding not to add much.

BP's offer was only 1.5% more than Norwegian's.

Everyone is aware of the level of Brazil's domestic oil industry.

If the price quoted is too high, it will easily slow down the exploration progress and increase the cost.

Xu Liang nodded affirmatively, "Although there are some risks, after all, ExxonMobil and BP are still here."

Andrew responded and thought for a moment.

"Signing fee of US$22 million, maximum obligated investment of US$65 million, local procurement ratio of 43%."

The Unocal employee in charge of the bidding quickly entered his request into the computer, and it was quickly displayed on the large central screen.

"Unico..."

"Have you finally taken action?"

At this moment, regardless of whether they knew each other or not, almost everyone focused their attention on Xu Liang and the Unocal employees around him.

Unocal's strength is only average among the oil giants.

But they have a super-rich boss with a net worth of more than 40 billion US dollars and the second-largest person in Forbes.

"There's something good to watch next." John Watson smiled.

Unlike his gloating, the brows of Exxon Mobil Chief Operating Officer Paul Stevenson and BP Oil Company Senior Vice President Devin Johnson frowned at the same time.

No one wants to see Cheng Yaojin come out halfway when they are getting closer and closer to the final goal.

"Devin, should we add more?"

"add."

BP is bound to win the No. 2 oil block.

But the people at ExxonMobil beat them to it.

“The signing fee is US$23 million, the maximum obligated investment is US$66 million, and the local procurement ratio is 43%.” Based on Brazil’s current oil development status, this investment is actually already very high.

When everyone is competing, no one will be stupid enough to add millions at once.

"Boss, should we add more?" Andrew asked.

"Add, at least one more round. But this time add half a million dollars."

After Xu Liang disrupted the situation twice, BP still persisted until the end.

"The signing fee is US$30 million, the maximum obligated investment is US$78 million, and the local procurement ratio is 43.3%. Congratulations to BP Petroleum Company for winning the concession exploration period of Block 2 in the next three years and the concession period of 35 years."

Devon Johnson finally showed a relieved smile on his face.

Although the price was higher than previously expected, the results were satisfactory.

"It's not like his style to give up after only two rounds."

Looking at the tall figure on the left front, John Watson frowned.

He couldn't figure out the other party's plan.

"I didn't expect BP to persist until the end."

Xu Liang smiled.

“Compared to Block 2, Block 6 is more popular.

This is what Exxon Mobil really wants to get.

By the way, Andrew.

What is the activation index of Brazil's shallow offshore oil fields? "

"$3,200."

The activation index is a parameter used to measure the amount of investment required for a new oil well, usually expressed in dollars per barrel per day at stable production.

An activation index of US$3,200 means that the cost of drilling an oil well with a daily output of 100 barrels is US$320,000.

An oil field with an annual output of 10 million barrels means a daily output of more than 27,000 barrels.

Calculated based on the activation index of Brazil’s offshore oil fields, at least US$86.4 million is required.

If you include the US$30 million signing fee, it means that BP will have to pay at least US$116 million in huge cash before seeing the black gold flowing.

If political costs are included, the total cost for BP to acquire the No. 2 oil well is nearly US$120 million.

The latest international oil price is currently around US$70 per barrel.

The profit of oil companies is about 10~15%.

In other words, for every barrel of oil sold, after deducting a series of necessary expenses such as income tax and mining tax from the Brazilian government, BP can obtain a net income of US$4 to US$6 per barrel.

In other words, with an annual output of 10 million barrels, it will take BP at least three years to recover its costs.

But offshore oil extraction is more troublesome than on land.

Assume BP can find oil in Block 2 within three years.

So usually within three years of starting construction, the oil company has basically no income.

If all goes well, the rewards will be substantial in the sixth or seventh year.

This means that it will take at least eight to nine years for BP to recover its costs.

If bank loan interest is calculated, this number will continue to extend further.

The most important thing is that if there is indeed oil in the No. 2 exploration area, its reserves must be at least 100 million barrels. Otherwise, it will be difficult for BP to recover the cost.

"It seems that BP people have concluded that there is at least one large oil field under Block 2 with reserves equal to or greater than Alma."

After Andrew nodded, "What do you think?"

"I'm not God." Xu Liang shrugged.

Next comes the bidding for block 3.

The consortium headed by Dauda won this block with a signing fee of US$18 million, a maximum obligated investment of US$65.3 million, and a local procurement ratio of 42.1%.

ChevronTexaco bid independently and won the exploration and development rights of Block 4 with a "signing fee of US$17.5 million, a maximum obligated investment of US$71 million, and a local procurement ratio of 42.2%."

Suncor Energy, EOG, Chesapeake Energy and Apache, four U.S. and Canadian oil companies.

With a "signing fee of US$16.5 million, a maximum obligated investment of US$55 million, and a local procurement ratio of 41.2%", it won the exploration and development rights of Block 5.

"The next step is the bidding for block 6."

Roberto Murici's voice once again mobilized everyone's attention and passion.

"This is the proverbial fat one. ...Andrew, we're all in on it this time!"

"Participate in the whole process?"

"If you want people to believe it, you have to act like it."

"Then when do we give up?"

"Put it back as far as possible. It depends on the situation. I'll just run away." Xu Liang said.

The competition in Block 6 was particularly fierce, with prices rising alternately and then slowing down after a full minute.

A consortium of small and medium-sized companies was the first to be eliminated.

The fattest meat is naturally the prey of international oil giants.

The prices of the six major companies, ExxonMobil, BP, Dowdel, ChevronTexaco, Shell, and Unocal, rose alternately and soon set a new bidding record.