Photo: Brazil Plans to Auction Off New Oil Blocks in May 2013
Brazil is planning an auction of new oil and gas exploration and production blocks for May 2013, although that long-delayed round will depend on prior approval of a new regulatory framework, Mines and Energy Minister Edison Lobao said.
He said the idea is for 174 new blocks - roughly half onshore and half offshore - to be placed on offer that month in the so-called “11th Round” auction, while another auction for rights to drill in the ultra-deep “pre-salt” region is being planned for November 2013.
The “pre-salt” frontier, discovered in recent years and so-named because the reserves are located far below the ocean floor under a shifting layer of salt, holds tens of billions of barrels of crude and could transform Brazil into a major oil exporter.
Lobao said the National Petroleum Agency, or ANP, will provide the concrete dates of the bidding process and details about the areas that will be on offer in the coming days.
But he said the auction will depend on congressional approval of a new regulatory framework proposed by President Dilma Rousseff’s administration.
The main obstacle thus far has been the contentious issue of how royalty payments will be distributed among Brazil’s 26 states and the federal district.
At present, most revenue from oil production goes to oil-producing states Rio de Janeiro, Sao Paulo and Espirito Santo, but the new framework - which has passed the Senate but been stalled in the lower house - would distribute royalties more equally among all the states.
Lobao said he is confident the new regulatory framework will be approved by year’s end and said the government is consulting with lawmakers to ensure that deadline is met.
“We’re counting on the approval of the ‘royalties’ measure this year because the next oil and gas auction should be held under the new law,” he said.
Separately, Brazilian state-controlled oil giant Petrobras, which will hold a minimum 30 percent stake in all pre-salt projects, has reached an equipment deal with GE Oil & Gas.
That subsidiary of the U.S. multinational conglomerate announced the 2.3 billion reais ($1.1 billion) deal for the sale of approximately 380 subsea wellhead systems and installations tools required for crude exploration.
The agreement was signed at the 2012 Rio Oil & Gas event, which was held earlier this month.
More than 75 percent of the wellheads - components at the surface of oil and gas wells that help contain pressure, among other functions - will be made by GE Oil & Gas at its plant in the city of Jandira, in Sao Paulo state.
GE Oil & Gas said in a press release Tuesday that the deal was “the world’s biggest contract in subsea wellhead production” and noted that Petrobras plans to install those parts “in various oil and gas fields in Brazil,” including the highly promising pre-salt region.