Brazil's 6th Licensing Round to be Held in June 2004

Brazil will hold its sixth annual oil exploration and production licensing round in June 2004. The government will be offering some highly productive areas in an effort to lure investments from oil majors.

"We'll offer areas where significant discoveries have been made, with great potential for new finds, to attract big local and international investors," Brazil's Mines and Energy Minister Dilma Rousseff said Thursday at a seminar on Brazil-Norway oil industry cooperation.

Aside from the highly productive areas, the country's oil regulator ANP, which oversees the licensing process, will offer two other categories of E&P blocks next year: blocks located in mature fields, which are expected to attract medium and small-sized firms; and so-called frontier areas, where no significant finds have been made, but that the government would like to see developed by private investors.

The country's fifth annual E&P licensing round in August saw very little interest because only a few significant discoveries were made since Brazil opened the oil exploration business to private and foreign players in 1999.

Moreover, most of the finds made so far are of heavy crude, which is expensive to refine. Brazil's onerous tax system has also weighed on investors' decisions, analysts say.

Petrobras acquired 88 out of 101 blocks awarded in the two-day auction. At the time, Maria das Gracas Silva Foster, oil and gas secretary at the Energy Ministry, said ANP would place larger areas on offer next year to attract bigger players.

Foster said the government-run ANP would re-offer potentially oil rich blocks that have been relinquished by Petrobras, as well as other coveted but unexplored blocks in productive areas.

After the government opened E&P activities for competition in 1999, Petrobras requested to keep some areas it judged potentially productive. ANP gave Petrobras a five-year period to work on the blocks, and directed the federally owned company to relinquish areas were no finds had been made.