Brazil's ANP Removes Blocks from Suspended 8th-Round Sale

RIO DE JANEIRO (Dow Jones), Oct. 28, 2009

The Brazilian National Petroleum Agency, or ANP, said Wednesday that it would remove blocks from the suspended eighth-round concession auction.

The ANP's decision means that exploration and production blocks that never made it to the bidding round during the suspended auction will be removed and could be made available at future E&P concession auctions, a spokeswoman said.

"The decision was taken in virtue of the prolonged time that the judicial questions relating to the eighth-round have demanded and the fact that the possibility of including these areas that were not up for bids in future rounds it would be advantageous for the country," the ANP said in a statement.

The eighth-round auction was suspended in November 2006 after a local court granted an injunction stopping the sale. Before the auction was halted, 38 of the 284 oil and gas exploration and production blocks up for bid were auctioned off.

The auction drew intense interest because it included blocks close to promising subsalt oil reserves.

The so-called subsalt oil discoveries were made recently under a thick layer of salt in the Santos Basin off the coast of Sao Paulo and Rio de Janeiro states. The oil lies under more than 2,000 meters of water and a further 5,000 meters under sand, rock and a shifting layer of salt.

The first of the subsalt discoveries, called Tupi, was estimated to hold recoverable reserves of between 5 billion and 8 billion barrels of oil equivalent. That was the Western Hemisphere's largest oil find in more than 30 years.

Government officials had previously said that no decision on restarting the eighth round would be taken until proposals to change Brazil's regulatory framework had been submitted to congress. Brazilian President Luiz Inacio Lula da Silva submitted those proposals in September.

The new regulatory framework will give Brazil's government a greater stake in offshore oil reserves in the promising subsalt oil region.  

Copyright (c) 2009 Dow Jones & Company, Inc.

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