Brazil Oil Block Auction Draws Record Interest

RIO DE JANEIRO Oct 11, 2005 (Dow Jones Commodities News Select via Comtex)

A record number of companies is likely to participate in Brazil's seventh yearly auction of exploratory oil and gas areas on Oct. 17-19, according to the director of the National Petroleum Agency, or ANP, the Estado newswires reported Monday.

Fifty-three companies already have shown their interest in acquiring exploration blocks, while 113 companies want to take part in auctions for small, mature oil fields, ANP Director John Forman said at an event in Rio de Janeiro.

Of these companies, 46 already have qualified for next week's auction of exploratory blocks, while 87 have qualified for the auction for mature fields.

At an auction last year, a total of only 24 companies participated.

The agency earlier had said it would offer 1,134 blocks, of which 509 are on land and 625 are offshore.

Of the offshore blocks, only 87, or 16%, are in areas considered to have a high potential to hit oil or gas. Several of these blocks are situated in Espirito Santo state, just north of Rio de Janeiro, close to the Golfinho field where state-oil company Petroleo Brasileiro SA (PBR), or Petrobras, is slated to start producing more than 100,000 barrels of light crude a day next year.

The ANP also will offer new blocks close to the Mexilhao gas field in the Santos Basin, off the coast of Sao Paulo, where Petrobras hit gas with proven reserves at 72 billion cubic meters. It hopes to produce at least 12 million cubic meters a day beginning in 2008.

In the entire Santos Basin, Petrobras estimates gas reserves of about 420 bcm.

Next to a greater emphasis on fields with a potential for gas discoveries, the ANP this year also will auction 17 mature oil fields on land in the northeastern states of Bahia and Sergipe that have been given up by Petrobras due to their small size, but could still be interesting for smaller or "independent" oil companies.

Forman said that the ANP has a "great expectation" for areas in the basin of the Sao Francisco river in northeastern Brazil that will go up for auction for the first time.

"There is a strong indication that the region could have oil or gas, but there never have been consistent exploratory activities there," Forman was quoted as saying.

He said the agency also sees a "good potential" for areas in the northeastern offshore Sergipe and Alagoas Basin, and for the region of the Solimoes river in the Amazon rain forest.

Forman said that if oil prices stay high, Brazil's oil reserves could rise fivefold in coming years.

(C) 2005 FWN Select. All Rights Reserved


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