Brazil hails success of 10th round auction

Eric Watkins
Oil Diplomacy Editor

LOS ANGELES, Dec. 19 -- Haroldo Lima, president of Brazil's hydrocarbons regulator Agencia Nacional do Petroleo (ANP), said the first day of the country's 10th round auction of 130 oil and gas exploration concessions was highly successful.

Scheduled for 2 days of bidding, the entire auction was completed in a matter of hours on the first day.

The government earned some 89.4 million reais ($37.9 million) in premiums but sold fewer lots than during last year's 9th round, which brought in record fees of 2.1 billion reais.

Petroleo Brasilerio SA (Petrobras) bought rights for 27 areas of the 54 sold, mainly in the Amazon sedimentary basin, while Royal Dutch Shell bought rights to explore five blocks in the Sao Francisco basin in Minas Gerais state.

Petrobras and Shell and were the only international oil companies (IOCs) to secure areas in the round. Fewer IOCs participated, largely because the auction was restricted to onshore areas and excluded bidding on the potentially more-lucrative subsalt offshore areas, which will be held back until a government committee completes studies of possible changes to Brazil's oil legislation. (OGJ, Oct. 20, 2008, p. 29).

The panel is studying possible changes to Brazil's oil laws, including a greater take of profits from production at the country's offshore subsalt oil reserves.

Marco Zimmerman, the country's acting mines and energy minister, said, "The working group is finalizing its report and will submit it to the president in coming weeks." President Luiz Inacio Lula da Silva wants to use proceeds from the subsalt oil deposits to alleviate the country's poverty and improve its educational system.

Workers protest auction
Concerns over the rights to Brazil's oil continue in other areas as well, with oil workers and members of the Landless Workers Movement (MST) staging a demonstration at Petrobras headquarters against the licensing round.

The protest was one of several coordinated by Brazil's oil workers union seeking to end all sales of oil exploration rights to companies other than Petrobras. The union also wants the government to re-establish the company's monopoly over Brazilian oil output.

Contact Eric Watkins at hippalus@yahoo.com.

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