Brazil to hold October offshore auction

Brazilian National Petroleum Agency

Brazilian energy officials visiting Houston, Texas, discussed an upcoming auction of offshore oil leases that they hope will attract foreign investment for a new field estimated to hold as much as 12 billion barrels of hydrocarbons.

The Oct. 21 auction will be Brazil's first effort to attract international oil companies to its Libra field, which is called a pre-salt play because its potentially billions of barrels of crude lie under thick layers of salt. Ramping up production at Libra is a crucial part of a broader plan to double production in Brazil by 2020 through the development of its pre-salt region. An attraction of the Libra field is its proximity to other plays, and the potential synergies this could generate for project participants.

The Brazilian government will award a single contract to the highest bidder in the October auction round, and also expects a signing bonus, said Magda Chambriard, general director of the Brazilian National Petroleum Agency.

Brazilian national oil company Petrobras will be the operator. It will retain at least 30 percent ownership of the project, and can compete for a higher stake. Much of the preparatory and exploration work has been completed, lowering the risks for prospective bidders. The proposal also requires companies to use Brazilian shipyards to meet local content requirements for drilling platforms, rigs and supply boats. The Brazilian government has approved the terms of the October auction, and a separate auction in November will offer leases for natural gas production onshore.

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