Junior oil firms are receiving mixed messages from Brazilian authorities as they eagerly await a possible round for marginal, onshore acreage in Brazil, Gary Leach, the executive director of the small explorers and producers association of Canada (SEPAC), told BNamericas.

“I think there have been mixed messages from Brazil. Clearly, they have a very exciting opportunity in the pre-salt areas. They are mesmerized by that, and it has a huge potential for the country,” Leach said.

“I think it’s taken their eyes off sending out a consistent message about their desire to attract some smaller foreign companies to onshore opportunities,” he added. “There have been two steps forward, and then one step back, especially in terms of what kind of onshore blocks that could be put up for bid.”

While Brazil’s federal oil company Petrobras (NYSE: PBR) is obviously focused on directing massive amounts of new capital into the prolific pre-salt areas, smaller oil firms including Canadian juniors could play an important role in the country’s onshore industry if given the opportunity.

“There is still that reluctance to recognize that Brazil will do better with foreign companies. They’ll be able to develop the full spectrum of their resource opportunities with a wide spectrum of players,” Leach said.

“To get some of these smaller players, they need to make it clear that that’s a good thing, and I’m not sure that they’ve conveyed that in a sufficient way. If they would do that, I think they would see a lot more Canadian companies in Brazil,” he continued.

Brazilian hydrocarbons regulator ANP is expecting to launch the highly anticipated round 11 for new oil blocks in April or May of this year, ANP director Nelson Narciso said in October last year.

New areas in Brazil’s pre-salt areas will not be included in the round, as the country is currently changing the concession framework for blocks in the area.

Calgary-based Gran Tierra Energy (Amex, TSX: GTE), which has acreage in Colombia, Peru and Argentina, is expected to participate in the round and has already opened an office in Brazil.

“We like the competitive profile in Brazil because everybody is focused on deeper water and pre-salt type of plays, and that’s where all the money and focus is going, so we think we can pick up some highly prospective acreage in the next bid round,” Gran Tierra CEO Dana Coffield said in November.

Toronto-based Pacific Rubiales (TSX: PRE) also said it is looking at the possibility of Brazil.

“We will see what Brazil is going to offer in the onshore round, and then we will rank it among all the exploration blocks we have. If there is interest, then we will have a look,” company president Jose Francisco Arata said late last year.

“So far we haven’t entered Brazil because the environment in Brazil is not as competitive as what we see in Colombia and Peru,” he added.

The complete interview with Leach will be published in this week’s edition of Perspectives, for subscribers only.

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