(Bloomberg) -- Cautious optimism about Brazil’s future oil prospects is building ahead of a Wednesday oil auction thanks to huge discoveries that TotalEnergies SE  and Shell Plc have made on the other side of the Atlantic Ocean.  

The Pelotas basin in southern Brazil, where the oil regulator will be offering exploration acreage, is viewed as geologically similar to Namibia where the two European oil majors are busy drilling to determine the size of recent finds. The African country was connected to South America before the two continents started separating more than 100 million years ago, and Pelotas is viewed as Brazil’s best geologic analogue. 

Read More: TotalEnergies CEO Says Namibia Oil Discovery Could Be a ‘Giant’

Oil exploration in Brazil badly needs a shot in the arm. A decade has passed without any major discoveries in the nation’s waters despite attempts by the world’s most experienced offshore drillers. Petroleo Brasileiro SA, Exxon Mobil Corp, Shell and Total have all explored the so-called pre-salt region of the Atlantic without uncovering major fields. It means that Brazil’s oil production will peak around the end of the decade unless new deposits are discovered and developed.

“The pre-salt boom is over,” Magda Chambriard, a former head of Brazil’s oil regulator, known as the ANP, said in an interview. “It’s time to look for new frontiers so Brazil can keep producing oil.”  

The ANP is offering a total of 602 oil blocks that span areas on land in the Amazon Basin to deep-water regions in northeastern and southern Brazil under concession contracts. 

An additional five blocks will be offered in the pre-salt region under a production-sharing model where bidders win by offering the government the largest percentage of profit oil. Signing bonuses for the pre-salt blocks total 259 million reais ($52 million). Petrobras declined to exercise its preferential rights for these blocks ahead of the auction.

Brazil’s oil industry has also run into other headwinds. Environmental authorities have thwarted efforts to explore a deep-water region known as the Equatorial Margin amid increasing pressure globally to shift away from fossil fuels. A recent slump in oil prices is likely to make bidders cautious. Environmental activists are organizing against 77 deepwater blocks, including some near Fernando de Noronha, a volcanic archipelago and tourist destination.

Still, Latin America’s biggest oil producer holds plenty of potential, even in the pre-salt, said Pedro Zalan a geologist and consultant who previously worked at Petrobras. Explorers need to stop trying to replicate the success that Petrobras had earlier this century and look for different geologic structures, including one in the Santos Basin that is on offer on Wednesday, that could hold commercial volumes of oil, he said. 

“It’s time to test new ideas in the pre-salt,” Zalan said. 

(Updates to add that Petrobras declined to use preferential rights for the pre-salt blocks. A previous version corrected fifth paragraph to show that 259 million reais in signing bonuses is for pre-salt blocks.)

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