Oil major Royal Dutch Shell won half the blocks awarded in Brazil’s deepwater oil auction Oct. 27, while rival BP took two blocks and ExxonMobil Corp. took one in a historic opening of the presalt play to foreign operators.

Brazil awarded six of the eight blocks on offer in the auction for the rights to pump oil from the country’s coveted presalt region, where billions of barrels of oil are trapped below thousands of feet of salt in the country’s Atlantic waters.

President Michel Temer said development of the blocks would lead to $30.84 billion in investment from the winning companies and $39.7 billion in royalties and other revenues for the cash-strapped state.

The wins bolster Shell’s position as the largest foreign operator in Brazil’s offshore oil sector, second only to state-run oil giant Petrobras, adding more than 1,700 sq km (656 sq miles) to its deepwater Brazil portfolio.

The Anglo-Dutch oil major won one area in a consortium with France’s Total SA, another with Petrobras and Repsol-Sinopec, and a third with Qatar Petroleum International and China’s CNOOC.

Shell said it is confident it can pump oil from the presalt fields at below $40/bbl.

“These winning bids were submitted after our thorough evaluation and add strategic acreage to our ... global deepwater growth options,” Shell Upstream Director Andy Brown said.

BP, which is active in Brazil but not yet producing oil, took two blocks.

“We see the government of Brazil being more supportive of foreign companies entering Brazil,” BP Latin America President Felipe Arbelaez said after the rounds. “There are high-quality assets. We believe that the assets here will be resilient in any price environment.”

Brazil earned $1.88 billion in signing bonuses for the six fields that it awarded in the auction.

Temer’s government has enacted reforms to make the energy sector more attractive to foreign investment, and for the first time international oil firms will be allowed to operate fields in the presalt.

Countries worldwide sitting on oil and gas reserves are keen to pump it before it becomes less valuable as global policies to address climate change kick in.

The opposition in Brazil has pushed back against the reforms, and the auction was delayed by three hours Oct. 27 after a federal judge issued an injunction to suspend the process at the behest of the leftist Workers Party, which opposes the privatization of oil production.

That left top executives from the world’s largest oil companies milling around in the hotel that hosted the auction, in an upscale seaside neighborhood in Rio de Janeiro.

ExxonMobil

U.S. major ExxonMobil, whose 10-block win in September’s Brazilian auction was seen by many as a prelude to a big play Oct. 27, took just one block as part of a consortium with Statoil and Petroleos de Portugal SA, a unit of Galp Energia SGPS SA. Two blocks got no bids.

But ExxonMobil bought a stake in a nearby block from Statoil for $1.3 billion, Statoil said, soon after the round.

“Our full intent is to get right after the Brazil acreage,” Jeff Woodbury, ExxonMobil’s head of investor relations, said on a conference call following the auction.

The quality of reserves and the reforms have made Brazil an important target for oil majors, even though they have had less appetite for capital-intensive megaprojects since crude prices crashed in 2014.

Peroba, which was clinched by Petrobras, BP and China National Oil & Gas Exploration and Development Corp., boasts an estimated 5.3 Bbbl of oil while Carcara, won by Statoil, ExxonMobil and Petrogal, is thought to have some 2.2 Bbbl of oil.

“Brazil’s offshore is one of the last major plays out there that’s in its infancy,” said Brian Youngberg, an oil industry analyst at Edward Jones. “Companies that are still interested in the big elephants out there, like Exxon and Shell, are aggressively pursuing them.”

Brazil has high hopes for the volume of oil the companies can pump from the blocks. Brazilian oil output could double to more than 5 MMbbl/d by 2027, compared with the 2.6 MMbbl/d produced in August, regulator ANP has said.

Two blocks on offer at the auction were not placed. But ANP general director Decio Oddone still considered the rounds a success.

“A result in which 75% of offered areas are sold is a resounding success anywhere on the planet according to any point of view,” he said. “Brazil returned to the oil and gas sector with this auction.”

—Reuters