Brazil Cuts 41 Blocks from Upcoming Oil Block Auction

RIO DE JANEIRO Nov 8, 2007 (Dow Jones Newswires)

Brazil's government will cut 41 blocks from an upcoming auction of oil and gas exploration and production blocks, Dilma Rousseff, the Chief of Staff of President Luiz Inacio Lula da Silva's government, said Thursday.

The move comes after state-run oil firm state-run oil firm Petroleo Brasileiro SA (PBR), or Petrobras, earlier Thursday said it estimates the recoverable volume of oil and gas at its ultra-deep Santos Basin Tupi field at between 5 billion and 8 billion barrels or oil equivalent, or BOE.

Brazil's government took out the 41 blocks from an auction scheduled for Nov. 27 and 28 as they lie close to the BM-S-11 block that contains the Tupi discovery, or lie in areas with similar geographical conditions. The National Petroleum Agency, or ANP, will hold the auction with the remaining 271 oil and gas blocks.

"Our decision is based on national interest," Dilma Rousseff, the chief of staff of President Luiz Inacio Lula da Silva, said in a televised news conference at Petrobras headquarters.

The Tupi find could mean that Brazil "transforms itself from a country of medium importance that is seeking self-sufficiency in oil to a country that has an exporting quality like Arab countries or Venezuela," Rousseff said.

The company's Brazilian oil and gas reserves stood at 10.573 billion barrels of oil equivalent, or BOE, on Dec. 31, 2006, according to the criteria of the U.S. Securities and Exchange Commission, or SEC.

U.K. energy company BG Group PLC (BG.LN) holds another 25%, and Petroleos de Portugal, or Petrogal, a unit of Galp Energia (GALP.LB), holds the remaining 10%.

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