ANP to Finish Round 7 Studies by End-March

Brazil's national hydrocarbon regulator ANP expects to wrap up studies to determine the blocks to be offered in the seventh licensing round by end-March, ANP board member John Forman said during the 11th Latin Oil & Gas conference in Rio de Janeiro Tuesday.

ANP is completing studies of 34 areas in 14 of the country's 29 sedimentary basins, mostly offshore, and 23 areas in more mature onshore regions known as marginal fields, he said confirming earlier ANP comments that the number of blocks should be similar to last year's sixth round which was for 913 blocks.

Once the studies are finished the government's national energy policy council has to approve the blocks, he said.

Companies are showing interest in the tender scheduled for October and so far have not questioned too many details of the tender, Foreman said referring to the February 24 public hearing on the tender.

ANP is following the government's strategy to attract investment in areas likely to find gas. The blocks will include areas close to recent gas finds in the Santos basin, in the Campos basin in the southeast region of the country and in the Solimões basin in the heart of the Amazon region. In the northeastern region of the country, the ANP will offer blocks that were not awarded in the sixth round, he said. In 2004, only 154 of the 913 blocks offered were awarded.

"We have opportunities for small, medium and large companies," Foreman said. "Each round has it's own characteristics and several oil companies have important portfolios here."

ANP plans to continue to tender exploration licenses to develop Brazil's estimated 100 billion barrels of oil equivalent (bboe) of potential reserves, of which 18bboe are already proven, he said, adding that recent finds could add another 5.5bboe and that in coming years recoverable reserves could top 30bboe. "There is a lot of room for new finds, even in known areas," he said.


Brazil needs to continue yearly licensing tenders in order to guarantee the government's goal of oil self-sufficiency. "If the tenders stop, the acreage under concession will dwindle to close to nothing by 2012," Foreman said.

Despite the optimism over the upcoming round, Foreman recognizes that Brazil needs to increase geological studies in little known basins to attract companies and reduce their risk. Only 2.7% of the potential exploration area in Brazil's 29 basins has been awarded for exploration and only 0.22% is productive, he said.

To increase these percentages the country needs to boost studies, currently restricted as the federal government is withholding research funds from the ANP. Increasing studies of little-known regions is a way to stop companies abandoning exploration activities as UK oil company BP recently did by giving up exploration in two deep-water offshore blocks in the Foz do Amazonas basin in the northern region. "What happened to BP is worrisome and will only get solved as knowledge evolves," Foreman said.

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