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Brazil ready for landmark Libra auction today
October 21, 2013, 6:07 am

ANP claims the Libra field alone has enough oil to take care of the country’s current consumption rate for 12 years [Xinhua]

ANP claims the Libra field alone has enough oil to take care of the country’s current consumption rate for 12 years [Xinhua]

Eleven oil companies, including some of the world’s largest, are participating in Brazil’s auction today for the giant Libra field.

Finance Minister Guido Mantega said last week that Libra is expected to attract $180 billion in investment over the next 35 years.

Exploration rights for a non-renewable 35-year period would be granted through an auction on Monday in Rio de Janeiro.

The oilfield may become one of the world’s two largest deep-water fields, requiring an estimated $185 billion investment.

The Libra field is estimated to hold as much as 12 billion barrels.

Brazil’s National Petroleum Agency (ANP) said earlier that 11 foreign oil firms, including China National Petroleum Corporation, India’s ONGC Videsh and Malaysia’s Petronas, have paid more than 900,000 dollars each to participate in the auction.

ANP claims the Libra field alone has enough oil to take care of the country’s current consumption rate for 12 years.

Brazil requires state-run Petrobras to take at least 30 percent in concessions for the deposits that lie beneath a layer of salt below the Atlantic seabed.

Jorge Arbache, Professor of Economics at the University of Brasilia and Senior Economic Advisor at the Brazilian Development Bank, says the pre-salt layer can leverage investments in innovation and productivity in the country.

“The real ‘black gold’ that may emerge from the pre-salt layer is neither the oil nor the royalties, but rather the solutions to scientific and technological challenges, logistics, equipment and materials required by the oil industry.

“If developed in collaboration with universities and research centres in Brazil and absorbed by the domestic industry – national and international – such knowledge and skills could have profound effects on other industrial sectors with unprecedented economic and social impact,” Arbache told The BRICS Post.

Monday’s auction will take place amid heavy security as the government deployed over a thousand security troops on the roads of Rio de Janiero in the backdrop of protests against the auction.

On Thursday, Brazilian oil workers launched a strike against the sale.

Unions say the Libra oilfield auction will damage national interests by allowing foreign companies to share production rights with state-run oil company Petrobras.

Under the new profit-sharing model issued by the Brazilian government, which is applicable to the Libra field, state-run oil and gas giant Petrobras must participate in all consortia with at least 30 percent stakes, and must be the operator of the block.

The new model also asks the consortium winning the bid to pay a 15 billion real ($6.8 billion) bonus to the Brazilian government in advance.

Brazilian president Dilma Rousseff announced during the recent protests that the government will resubmit a bill to Congress demanding oil royalties be invested exclusively in education.

American companies have not bid for the auction reportedly owing to the tougher auction model.

Today’s bidding round follows another held in May for onshore and offshore blocks that are not pre-salt.

With inputs from Agencies