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Petrobras, Shell Win Onshore Blocks in Brazil Auction

Bloomberg

 

 

Petrobras, Shell Win Onshore Blocks in Brazil Auction (Update1) 

By Jeb Blount

Dec. 18 (Bloomberg) — Petroleo Brasileiro SA, Royal Dutch Shell Plc and Galp Energia SGPS SA were among the biggest winners at Brazil’s 10th-annual oil-rights auction today.

Petrobras won stakes in 31 onshore oil blocks, the National Petroleum Agencysaid today after the auction in Rio de Janeiro. Synergy Group took seven blocks, while Shell and Cia. Energetica de Minas Gerais each won five blocks. Portugal’s Galp was granted the rights to three blocks in partnership with Petrobras.

The ANP, as the petroleum agency is known, sold 54 of the 130 onshore exploration blocks offered. The sale was the first to exclude offshore blocks and comes a year after areas near Tupi, the largest discovery in the Americas since 1976, were pulled from last year’s auction.

The auction “was a way to bring exploration to new areas in Brazil,” Haroldo Lima, head of the ANP, told reporters after the auction. “Last year we had the pre-salt discovery, but there are other large unexplored areas in Brazil.”

Estimates suggesting the so-called pre-salt cluster around Tupi may contain 80 billion barrels of oil, or enough for more than 10 years of U.S. consumption, prompted the government to try to gain more control and increase oil revenue. Tupi, a 5 billion- to 8 billion-barrel field, was announced in November 2007.

Almost 50 companies qualified to take part in the two-day auction. The winning bidders today agreed to pay 89.4 million reais ($37.9 million) for right to the blocks and promised to invest at least 611 million reais, ANP said.

Offshore Appeal

Rio de Janeiro-based OGX Petroleo e Gas Participacoes SA, which bought the largest amount of blocks in the last auction in November 2007, plans to consider bidding this year.

OGX Vice President Francisco Gros said Dec. 10 that while the company was considering the blocks, the areas weren’t “the most interesting. Ninety percent of Brazil’s oil is produced offshore.”

Gros would like the Brazilian government, which has delayed releasing its revised oil rules several times in recent months, to announce its decision soon.

“It’s great to consider changes to Brazil’s petroleum legislation as long as the changes are made now, and they are favorable to investors,” he said. “Oil discoveries can pull Brazil out of the mud, help us economically move from the slums to the good side of town.”

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

Last Updated: December 18, 2008 12:18 EST

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