The Results of Brazil Oil Block Auction
Shell, Total, two Chinese firms and Brazil's state-run petroleum company Petrobras have won the development right of an offshore field in Brazil where there is 12 billion barrel of oil.
The auction was under a new legal framework has ruled to give the Brazil and its Petrobras more control of its oil discovery. There are about 100 billion barrels of oil under the formidable layer of salt.
The auction was a disappointment for the critics who have thought the legal rules could interrupt the foreign investors and the protestors who was tried to stop field from selling.
About 300 protestors demonstrated outside of the hotel where the bidding took place. They all tried to keep the Brazil oil industry nation-owned, while the security officials took firing gas and rubber bullets to stop them.
The Brazil oil
union had disagreed foreign share of the domestic petroleum and the oil workers were the first group to strike.
Pro-business critics commented there could be few private firms to bid due to the new law which ruled that Petrobras keep 30 percent share in oil block. They thought a consortium of many countries to operate could make the oil field investment and development in slow pace. The target of the bidding is to rank the Brazil in developed nations as well as improving the education and health facilities.
There were only 11 companies involved in the auction and there was only consortium that could win the bid. The last results was that Petrobras holds a 40 percent stake, Shell and Total each account for 20 percent and Chinese firms CNOOC and CNPC have 10 percent each.
Many professionals thought the new rule was a block and it would make production expensive. Due to the shortage of interest, the auction did not draw too much attention.
The non-conventional oil was in 6,000 to 7,000 meters deep. In the next 12 to 15 years, the fields would be invested $500 billion. Many participators withdraw from the consideration of little chance of benefit.
The technological difficulties should be overcome if companies want to obtain gain. They are challenged for Petrobras too even a world leader in oil development.
The deep-water reservoirs lie some 185 miles offshore in the Atlantic, more than a mile (kilometer) below the ocean's surface. There is high risk to develop the fields because the salt beds cab break loose and cutting off piping.
The Brazil economy is slow, while the oil production delayed. Some warns that the Brazil is taken the strategy to welcome foreign investment.
The Eurasia Group said the actuation was a growing strategy and financial constraints. The country was trying hard to get rid of the developing nation economy. May be there would be change in the next auction.
The willing to allow foreign oil companies to involve in the development of the Pre-salt can add Brazil dual advantages. It can lead more investment to the quicker production of the pre-salt and allow Petrobras a relief.
Government can not lose from the event. It was the poor shale gas and tight oil technology that lead the fewer attractions.