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Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks

Brazil

Brazilian oil regulator ANP said on Thursday that it might reopen bidding for the oil blocks in the pre-salt layer that don’t receive bids in next week’s auction.

Next Friday, October 27, Brazil will hold the second and third rounds of auctions for blocks in its pre-salt layer, considered one of the most promising potential developments offshore Brazil.

ANP said today that it would give the new deadlines for fresh bidding for possible unsold blocks after the completion of each of the two rounds of bidding next week.

Earlier this month, the Brazilian regulator published the list of the companies admitted to bidding in the two rounds. Ten firms were approved to bid in the second round and 14 were cleared to bid in the third round. Bidders include all the oil industry’s heavyweights, including Exxon, Petrobras, Petronas, Repsol, Shell, Statoil, Total, Chevron, BP, CNODC, CNOOC, and Ecopetrol. Each of the two rounds will offer up four blocks for auction.

The bidding rounds in the pre-salt layer will offer areas for oil and natural gas exploration and production under production sharing agreements
Brazil expects the eight blocks on offer to generate a total of US$36 billion in investments. The development of the blocks is also expected to generate a combined US$130 billion in royalties, profits, and income tax for the Brazilian state. 

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At the end of last month, Brazil auctioned 287 offshore blocks—just the first portion of a number of deep water deposits that hold an estimated 10 billion barrels of crude in proven reserves. As many as 30 companies took part in the bidding round—the first of a total nine rounds that will take place between now and 2019. In the first auction, Exxon was a big winner, securing the rights to develop 10 oil blocks in Brazil’s deep waters at an auction that marked a turn for the local oil industry after years of Petrobras’ reign.

The new government hopes to lure back investors by privatizing a string of state companies and by opening up the pre-salt layer oil wealth to all who are interested.

By Tsvetana Paraskova for Oilprice.com

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