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Brazil To Hold First Subsalt Oil Auctions Since 2013

Offshore rig

Brazil will hold two tenders for subsalt oil exploration this year in the first auctions of such offshore layers since 2013, Brazil’s oil secretary Marcio Felix told Reuters in an exclusive interview on Thursday.

The first subsalt auction is expected to be held in the first half of 2017 and will be for areas close to discoveries already under development, while a second auction slated for November will be for new exploration areas, Felix told Reuters.

According to the oil secretary, majors such as Royal Dutch Shell, Total and Statoil would also be attracted by the auctions, apart from Brazil’s state-held company Petrobras.

The fact that oil firms have slashed investments with the low oil prices would not be a problem in Brazil’s subsalt auctions, because the subsalt is the “Olympics” of offshore exploration, Felix said.

Brazil also plans to hold three oil exploration auctions in 2018, including one for subsalt, the secretary noted.

As Brazil is trying to attract oil majors to develop its offshore areas that have been under protectionist policies for much of the past decade, Brazil’s Energy Minister Fernando Coelho Filho said last week that the country expected to reap up to the equivalent of US$1.4 billion from three oil and gas exploration licensing rounds this year.

Related: Oil Tanks After EIA Reports Surprise Crude, Gasoline Build

The pre-salt exploration licensing round is expected to account for most of the expected revenues, with the government hoping to raise at least US$941 million (3 billion Brazilian reais), the minister noted. Brazil is working to slate the pre-salt licensing round for the first half of the year, compared to initial plans to hold it in the second half of 2017, he added.

Energy consultancy Wood Mackenzie said last week in its global upstream outlook for 2017 that Brazil’s pre-salt, together with the Permian Basin in the U.S., would be the hot oil plays for development this year, with both areas having materiality and one of the lowest development breakevens worldwide.

By Tsvetana Paraskova for Oilprice.com

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