Brazil to Hold First Pre-Salt Oil Exploration Auction in October

RIO DE JANEIRO - Brazil will hold its first auction of pre-salt oil exploration acreage under the country's new production-sharing regime in October, one month earlier than expected.

Brazil's National Energy Policy Council, or CNPE, announced the decision in Thursday's Federal Register. The first area up for bidding will be the Libra prospect, which local regulators estimate could hold as much as 16 billion barrels of recoverable crude. Brazil's National Petroleum Agency, or ANP, had originally said it would hold the auction in November.

The pre-salt auction will follow the country's successful sale of oil and natural gas exploration concessions earlier this month, which raised about 2.8 billion Brazilian reais ($1.4 billion) in signing bonuses. The acreage in the auction, Brazil's first in five years, was sold under concession agreements that give oil companies control over exploration and development in return for royalties on crude oil and natural gas production.

Under the new production-sharing regime, Brazilian state-run energy giant Petroleo Brasileiro, or Petrobras, will be the operator of the pre-salt areas and hold a minimum 30% stake. Winning bids will be determined by the amount of profit oil, or oil produced after development costs, that companies agree to give the Brazilian government.

The main pre-salt oil fields lie in the Santos Basin off the coast of Rio de Janeiro and Sao Paulo states, under about 2,000 meters of water and a further 5,000 meters below sand, rocks and salt.


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