Does Brazil Auction Flop Forbode the Outcome of the Saudi Aramco IPO ?

[Jabbar + 465]

They are different in that Brazil was an auction of offshore leases and Aramco IPO a sale of shares. 

They have a common thread . . . . . OIL.  

Brazil Auction was doomed from the start. Unusually high royalties plus onerous and inflexible terms. Big upfront dollars. . Especially given today's oil industry environment. They were shooting for $50 to $70 Billion. They took in $17 million of mostly local companies. They threw a party and nobody showed up. The Majors pulled a no-show.

Aramco IPO is selling lower percentage to local Saudis and major oil clients, providing discounts and incentive and locking up sale of share for given period.

Any way you look at it a disappointment for both Brazil and Saudis.

Edited November 10, 2019 by Jabbar

[footeab@yahoo.com + 2,192]

This is as stupid as buying mining "rights" in China... as a foreigner... you can't, it is not allowed and even if you were, it would be taken as soon as politically acceptable to do so. 

[James Regan + 1,776]

Both shows signs of desperation and greed, however the Brazilian auction failed primarily due to the upfront bonuses that would have been paid, they broke records last year and thought that this round would do the same. There has been some bad news recently for Bolsanaro, they released the communist Thief Lula from Jail, this maybe spooked the IOCs. I can see a magic bullet scenario happening soon.

Edited November 9, 2019 by James Regan

[Douglas Buckland + 6,308]

On 11/8/2019 at 1:19 AM, Jabbar said:

They are different in that Brazil was an auction of offshore leases and Aramco IPO a sale of shares. 

The have a common thread . . . . . OIL.  

Brazil Auction was doomed from the start. Unusually high royalties plus onerous and inflexible terms. Especially given today's oil industry environment. They were shooting for $50 to $70 Billion. They took in $17 million of mostly local companies. They threw a party and nobody showed up. The Majors pulled a no-show.

Aramco IPO is selling lower percentage to local clients and major clients, providing discounts and incentive and locking up sale of share for given period.

Any way you look at it a disappointment for both Brazil and Saudis.

Just goes to show you, if you have a lease sale and offer onerous, inflexible terms while demanding outlandish royalties WHILE you are incapable of producing these assets yourself, do not be surprised when nobody takes you up on your offer and your oil stays below the mudline! A classic lose-lose situation for all involved. Perhaps the Russians or Chinese will step in now.

[James Regan + 1,776]

12 minutes ago, Douglas Buckland said:

Just goes to show you, if you have a lease sale and offer onerous, inflexible terms while demanding outlandish royalties WHILE you are incapable of producing these assets yourself, do not be surprised when nobody takes you up on your offer and your oil stays below the mudline! A classic lose-lose situation for all involved. Perhaps the Russians or Chinese will step in now.

Thats the problem the majors bought in last round, this time Petrobras has first refusal and in fact declined two blocks that they had agreed to buy (they should have been made to buy them), so these blocks were not up for offers, CNOC bought some interest. IMO they will restructure the bidding and do it again next round. If the left start to make waves now the you may well see some radical political and social movement in Brasil in the next year, we are just getting back on our feet and the judges come out with a new law that no-one can be jailed in the second hearing, now you can only be sent to Jail when all the evidence has been shown, even if its blatantly obvious you are guilty in the first instance, this goes for all crimes Murder, Rape etc.

Bolsanaro will bring in the military before he hands this country back to the communists.

Need to Privatise Petrobras and quickly, the oil refineries have been done already, full steam ahead I say.

Edited November 9, 2019 by James Regan

[Douglas Buckland + 6,308]

Good!

[Jabbar + 465]

17 hours ago, Douglas Buckland said:

Just goes to show you, if you have a lease sale and offer onerous, inflexible terms while demanding outlandish royalties WHILE you are incapable of producing these assets yourself, do not be surprised when nobody takes you up on your offer and your oil stays below the mudline! A classic lose-lose situation for all involved. Perhaps the Russians or Chinese will step in now.

One of the Chinese producers did bid in JV with local firm.  They won with a minimum required bid. 

Your points are well taken . Several blocks unsold.

Hopefully the new Socialist Argentina government takes notice.  Majors watching closely. Great potential both shale in Maca Veurta and offshore.

Edited November 10, 2019 by Jabbar

[Douglas Buckland + 6,308]

Argentina offshore? Haven’t heard much about that...🤔

Vaca Muerta looks like a huge gamble to me considering it is a shale play and the present government.

[Jabbar + 465]

11 hours ago, Douglas Buckland said:

Argentina offshore? Haven’t heard much about that...🤔

Vaca Muerta looks like a huge gamble to me considering it is a shale play and the present government.

Yes, Argentina offshore garnerning lots of interest by those in the know. The laggards will catch on and catch up.

A couple of the majors have joined together and hired a firm to 3D seismic mapping of the Malvinas West Basin.  

A company called Exxon was major bidder in round one last April. Have you heard of them ?🤔

Edited November 10, 2019 by Jabbar

[Douglas Buckland + 6,308]

10 hours ago, Jabbar said:

Yes, Argentina offshore garnerning lots of interest by those in the know. The laggards will catch on and catch up.

A couple of the majors have joined together and hired a firm to 3D seismic mapping of the Malvinas West Basin.  

A company called Exxon was major bidder in round one last April. Have you heard of them ?🤔

I was simply being honest and straightforward when I said that I had not heard much in regards to Argentina offshore.

Why do you seem to take each and every reply to your comments personally?

[Jabbar + 465]

11 hours ago, Douglas Buckland said:

I was simply being honest and straightforward when I said that I had not heard much in regards to Argentina offshore.

Why do you seem to take each and every reply to your comments personally?

I didnt take personally. I dont know your background. Most who follow oil  are aware. 

Relax. We're good.

[Douglas Buckland + 6,308]

5 minutes ago, Jabbar said:

I didnt take personally. I dont know your background. Most who follow oil  are aware. 

Relax. We're good.

I’ve been a drilling consultant for 25 years and worked on the offshore rigs in Brasil, the US and the North Sea prior to that.

Believe it or not, I do follow oil.

[Jabbar + 465]

10 minutes ago, Douglas Buckland said:

I’ve been a drilling consultant for 25 years and worked on the offshore rigs in Brasil, the US and the North Sea prior to that.

Believe it or not, I do follow oil.

I believe it.

[SERWIN + 749]

But think about it, just like China, the gov't runs things and if they decide tomorrow to quit sharing the correct info they can manipulate the numbers any way they want. You could wake up tomorrow and find out all the money you had in that IPO is gone. Do you think you would ever stand a chance of getting it back? The trade war with China has opened eyes around the world now, I believe. And giving money to an IPO controlled by an aristocracy would be insane in these times, they will do what ever they want, and to hell with the rules. I wouldn't put a penny into them, ever