Eleven Firms to Join Brazil Oil Auction

Eleven Firms to Join Brazil Oil Auction

The enormous Libra oil prospect, discovered in 2010, marked the largest oil discovery in Brazilian history. It is believed to hold between 8 billion and 12 billion barrels of recoverable oil and covers an area of 1,500 square kilometers (600 square miles) in ultra-deep oil fields.

RIO DE JANEIRO -- Eleven oil firms paid more than $900,000 each to enter an auction next month for rights to explore Brazil's huge deepwater Libra field.

International giants such as Britain's BP (IW 1000/4) and BG Group (IW 1000/261), as well as American firm ExxonMobil (IW 500/1) chose to stay away, according to National Petroleum Agency (ANP) chief Magda Chambriard.

The list features several titans of the oil industry, including China National Corporation, Anglo-Dutch Shell (IW 1000/1), Petrobras(IW 1000/21), France's Total (IW 1000/9), China National Offshore Oil Corporation and Chinese-Spanish Repsol/Sinopec, an ANP statement said.

Also taking part in the October 21 auction are Japan's Mitsui (IW 1000/279), India's ONGC Videsh, Portugal's Petrogal and Malaysia's Petronas.

Chambriard said she had expected about 40 companies to bid for Libra. "Now, there is an international context," she saod.

The enormous Libra oil prospect, discovered in 2010, marked the largest oil discovery in Brazilian history. It is believed to hold between 8 billion and 12 billion barrels of recoverable oil and covers an area of 1,500 square kilometers (600 square miles) in ultra-deep oil fields.

First Auction Under New Law

The auction will be for a 35-year nonrenewable concession to work the field. It will be the first to be held under a 2010 production-sharing law aimed at tightening government control over the huge offshore oil reserves.

That law included "an option for excessive government intervention, with a monopolistic role for Petrobras, a high demand for national content and all this frightens the investor," energy expert Adriano Pires said.

The sale will be won by the company or consortium that offers the largest share of output to the Brazilian government.

Next month's auction will be the first such sale since the 2007 discovery of huge pre-salt deepwater reserves off southeastern Brazil.

ANP estimates that those reserves, buried beneath several kilometers of ocean, bedrock and hot salt beds, could hold more than 100 billion barrels of high-quality recoverable crude and could turn Brazil into one of the world's top exporters.

Brazil hopes to boost its oil output from around two million barrels a day currently to nearly five million by 2020, largely thanks to the pre-salt reserves.

Petrobras will have a mandatory 30% participation in the Libra concession.

ANP will auction the remaining 70 percent, in which Petrobras can also participate alone or as part of a consortium with other firms.

Copyright Agence France-Presse, 2013

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