Petrobras readies oil reserve auction
RIO DE JANEIRO, Brazil
AFTER almost six years of waiting, Brazil’s energy giant Petrobras is readying a major auction this month of its deep-water “pre-salt” oil reserves, despite fears of excessive state meddling.
The October 21 Libra oil field auction in Rio de Janeiro — which experts say could put 12 billion barrels of oil up for grabs — has been highly anticipated as the start of the sell-off of the total deep-water reserves.
The Libra field is part of a vast discovery of reserves announced in 2007. The area is spread over 149,000 square kilometres (57,530 square miles) in the Atlantic Ocean — the biggest find in two decades.
According to official estimates, the total reserves — buried beneath several kilometres of ocean, bedrock and hot salt beds — could hold more than 100 billion barrels of high-quality recoverable crude and could turn Brazil into one of the world’s top exporters.
Last May, the government oversaw auctions for some 300 non pre-salt blocs, most of them located in hitherto unexplored regions off the country’s north and northeast.
That attracted unprecedented interest from around the world and another auction of 240 land-based blocs of gas will be held next month.
But experts say the Libra sale — the first of the pre-salt reserves — is the big prize.
The field in the country’s southeast, some 230 kilometres (140 miles) off the coast of Rio, could yield a million barrels of crude per day within five years, experts say.
Currently, Brazil produces two million barrels a day. It is looking to boost that output to five million bpd by 2020, thanks in large part to the pre-salt reserves.
Eleven oil firms will take part in the auction, but Petrobras will have sole operating rights and is guaranteed at least a 30 per cent concessionary stake under the terms of a 2010 law.
The law, passed during the tenure of then president Luiz Inacio Lula da Silva, aims to channel a large chunk of Brazil’s oil revenue into education and health.
“The scenario has changed with pre-salt and the 2010 law for the sector. But we are optimistic. Today, Brazil has what is most important for the sector — oil and gas,” Ricardo Savini, head of Deloitte/Brazil’s Oil and Gas Center of Excellence, told AFP.
“There will be three auctions this year, exploration activity is resuming,” added Savini.
Petrobras’ investment plans through 2016 come in at US$236 billion — 60 per cent of that earmarked for oil and gas exploration as well production.