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Brazil Sends Army to Protect First Pre-Salt Oil Sale

The Brazilian government is dispatching army troops to protect the auction of a $184 billion oilfield today in a Rio de Janeiro hotel. Soldiers, army vehicles, helicopters and navy ships are guarding the hotel in a beach-side suburb of Rio where companies including China National Petroleum Corp., Royal Dutch Shell Plc (RDSA) and Total SA (FP) are expected to vie for one of the world’s two largest offshore fields at 3 p.m. local time…

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October 21, 2013

The Brazilian government is dispatching army troops to protect the auction of a $184 billion oilfield today in a Rio de Janeiro hotel.

Soldiers, army vehicles, helicopters and navy ships are guarding the hotel in a beach-side suburb of Rio where companies including China National Petroleum Corp., Royal Dutch Shell Plc (RDSA) and Total SA (FP) are expected to vie for one of the world’s two largest offshore fields at 3 p.m. local time, as oil workers protest the concession. The security operation, which also includes police forces, began over the weekend.

The Libra auction will be the first since Brazil announced the discovery of the so-called pre-salt oil reserves in 2007 in the biggest discovery this century. The country’s main oil union has been protesting the auction with pickets outside the headquarters of state-run Petroleo Brasileiro SA (PETR4), or Petrobras, in downtown Rio and strikes that began last week to demand that the state retain control of the field. By law, Petrobras will hold at least a 30 percent stake and will act as operator.

The security deployment follows nationwide street protests that started in June over an increase in bus fares and expanded to include demands for better education and the removal of Rio Governor Sergio Cabral. Protesters last week entered the Energy Ministry in Brasilia.

At least 24 injunction requests had been filed in different Brazilian cities through yesterday requesting the suspension of the auction, with at least 18 dismissed by courts, Rio de Janeiro-based newspaper O Globo reported late yesterday, citing the national prosecutor’s office.

Libra is estimated to hold between 8 billion and 12 billion barrels and development will require a 400 billion-real investment during the 35-year concession, according to Brazil’s oil regulator. That would make it one of the two biggest offshore oil fields in the world together with Brazil’s Lula.

To contact the reporter on this story: Rodrigo Orihuela in Rio de Janeiro at [email protected]

To contact the editor responsible for this story: James Attwood at [email protected]

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