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Sinopec, ONGC bid for Brazil oilfield, BP & Exxon stay out
September 20, 2013, 5:34 am

Exploration rights for a non-renewable 35-year period would be granted through an auction on 21 October in Rio de Janeiro [Getty Images]

Exploration rights for a non-renewable 35-year period would be granted through an auction on 21 October in Rio de Janeiro [Getty Images]

Three oil companies from the United States and Britain on Thursday quit their bid for the Brazil’s largest oil discovery to date, the Libra oil field.

Brazil’s National Petroleum Agency (ANP) said in a statement Thursday that 11 foreign oil firms, including China National Petroleum Corporation, India’s ONGC Videsh and Malaysia’s Petronas, have paid more than 900,000 dollars each to participate in the auction.

Exploration rights for a non-renewable 35-year period would be granted through an auction on 21 October in Rio de Janeiro.

British Petroleum, BG Group, and ExxonMobil have quit their bid, according to National Petroleum Agency ANP chief Magda Chambriard.

Sources said the firms could have been deterred by the tougher auction model or could also be attributed to the increasing interest in shale gas prospects of the US.

Under the new profit-sharing model issued by the Brazilian government, which is applicable to the Libra field, state-run oil and gas giant Petrobras must participate in all consortia with at least 30 percent stakes, and must be the operator of the block.

The new model also asks the consortium winning the bid to pay a 15 billion real ($6.8 billion) bonus to the Brazilian government in advance.

Libra, located in the Santos Basin, 180 kilometers off the coast of Rio de Janeiro, is the largest deep-water oil field discovered by Brazil.

The oilfield is estimated to hold eight to 12 billion barrels of oil, doubling the country’s oil reserves.

When fully operational, it is expected to produce one million barrels of oil per day.

Brazil’s new auction rules stipulate that winning bids will be determined by the slice of profit oil companies are willing to share with the government.

Brazilian president Dilma Rousseff announced during the recent protests that the government will resubmit a bill to Congress demanding oil royalties be invested exclusively in education.

Each operating platform of Libra will have an estimated production capacity of 150,000 barrels per day.

The number of platforms was put between 12 to 18 by Chambriard.

Brazil will auction two thirds of its oil reserves in October.

“All the big guys should be interested in the bidding round we are promoting in October. This is huge,” said Chambriard recently in Singapore.

ANP claims the Libra field alone has enough oil to take care of the country’s current consumption rate for 12 years.

 

Source: Agencies

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