BRAZIL: Consortium led by Brazilian state-run oil company wins controversial auction of oil field despite protests

Record ID: 344352

  • Title: BRAZIL: Consortium led by Brazilian state-run oil company wins controversial auction of oil field despite protests
  • Date: 21st October 2013
  • Summary: RIO DE JANEIRO, BRAZIL (OCTOBER 21, 2013) (REUTERS) VARIOUS OF NEWS CONFERENCE (SOUNDBITE) (Portuguese) DIRECTOR OF BRAZIL'S NATIONAL PETROLEUM AGENCY, MAGDA CHAMBRIARD, SAYING: "The fact is that having these five companies we have absolute certainty that Libra will be developed in the most correct way possible in support of Brazilian society." VARIOUS FROM OFFSHORE OIL VIDEO PRESENTATION BEING PROJECTED AT NEWS CONFERENCE (SOUNDBITE) (Portuguese) BRAZIL'S MINING AND ENERGY MINISTER, EDISON LOBAO, SAYING: "You only show up to an auction of this nature, if you are one of those that actually believes in the greater possibilities, the quantities of petroleum shown here, and in total success moving forward." CLAPPING AT END OF NEWS CONFERENCE
  • Embargoed: 5th November 2013 12:00
  • Keywords:
  • Location: Brazil
  • Country: Brazil
  • Topics: Business,Industry,Politics,Energy
  • Reuters ID: LVAA0RLR98TPHC5UOJRKN4BR2AD3
  • Story Text: In an auction with a single bid, Brazil on Monday (October 21) sold production rights to develop the giant offshore Libra oil area to a consortium led by Brazilian state-run oil company Petroleo Brasileiro SA.
    Petrobras took 40 percent of the field, 10 percent above the legal minimum, in an auction that took place in a hotel Rio de Janeiro as hundreds of demonstrators gathered outside, sometimes clashing with police.
    France's Total SA and Anglo-Dutch Royal Dutch Shell Plc will each have 20 percent of the partnership, while China National Petroleum Corp and China's CNOOC will each have 10 percent.
    Highlighting the lacklustre interest by most major oil companies in Monday's auction, the companies agreed to give the government the minimum legal amount of so-called "profit oil" from the fields - or oil produced after initial investment costs are paid. Under the terms of a new production-sharing contract, that minimum was set at 41.65 percent of profit oil.
    Though hailed by the government as the start of development for its largest-ever oil discovery, the sole bid reaffirmed the fact that most multinational oil companies were turned off by the auction.
    Director of Brazil's National Petroleum Agency, Magda Chambriard said that the companies part of the winning group will bring the success to the project that the Brazilian people desire.

    "The fact is that having these five companies we have absolute certainty that Libra will be developed in the most correct way possible in support of Brazilian society," Chambriard said.
    Despite the huge potential of the offshore region, many foreign oil producers and other potential investors shied away because they believed the rules for the new concessions offered little upside for profit and too big a role for the government and Petrobras.
    Edison Lobao, energy and mining minister for Brazil, said that everyone involved in the auction sees the true potential.

    "You only show up to an auction of this nature, if you are one of those that actually believes in the greater possibilities, the quantities of petroleum shown here, and in total success moving forward," Lobao said.
    Monday's sale, the target of nationalist sentiment ever since Brazil found the oil, proceeded as hundreds of demonstrators outside the beachfront hotel that hosted the auction squared off against more than a thousand federal troops and other security personnel dressed in riot gear.
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