Brazil To Fund New Exploration Research

Officials with the National Petroleum Agency (ANP) said they had over $430 million designated for research, including the gathering of geological data and seismic prospecting, which is normally carried out by Petrobras. "This year we will start a new drive aimed at opening new prospects, new frontiers via geological studies," said ANP director John Forman, opening a seminar for potential bidders in June's auction, the fourth since 1999. "There are immense areas with no data available, where Petrobras has not yet researched."

While many foreign companies are involved in exploration, Petrobras is still Brazil's only oil producer. ANP head Sebastiao de Rego Barros said the government agency had in the past not used the research funds due to legal impediments, but was now ready to finance the studies in full. "We will have to order a service to make studies for the definition of oil blocks to be offered in the future and to better explore our underground resources. No one is barred, any company should be able to apply," Barros added. Brazil plans to be self-sufficient in oil by 2005 and eventually become a net exporter, although it now imports about 400,000 barrels per day.

ANP officials said they expected demand at the licensing round to be at par with last year or slightly below due to low world oil prices. Last year, the ANP sold licenses for about 60 percent of the blocks on offer. "Anyway, the expectations are good. Seven new firms want to bid, which should boost competition," Barros said. A total of 27 companies have so far bought information packages for the latest auction, compared with 38 last year, but there is still time before the application period ends in May. Newcomers include Nexen Inc., Alberta Energy Inc. and Norsk Hydro. The ANP is offering 40 offshore and 15 onshore areas in 19 basins across Brazil in the fourth round, one area more than in 2001. Another block has been dropped from the list due to legal problems, but the ANP still hopes to include it.