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  HOME | Main headline

Brazil Sells Rights to Develop Giant Offshore Oil Field
Petrobras, the Brazilian state oil company, will operate the Libra field with a 40% stake as Shell, Total and 2 Chinese firms scoop up the rights

RIO DE JANEIRO Ė Royal Dutch Shell Plc, Total SA and two Chinese firms are part of the Petrobras-led consortium that secured the right to develop Brazilís largest offshore oil field at Mondayís single-bid auction in Rio de Janeiro.

Petrobras, the Brazilian state oil company, will operate the Libra field with a 40 percent stake.

Libra is part of Brazilís pre-salt frontier: ultra-deep oil fields that stretch for some 800 kilometers (500 miles) off the coasts of the southeastern states of Espirito Santo, Rio de Janeiro, Sao Paulo and Santa Catarina.

Brazil is inviting international participation because of the immense costs and technical challenges involved in accessing those fields, which lie under water, rocks and a shifting layer of salt at depths of up to 7,000 meters (22,950 feet) below the ocean surface.

Brasilia established a new regulatory regime for the development of the pre-salt fields, which have the potential to transform the South American country into a major crude exporter.

The regulations require that Petrobras be the sole operator, with a minimum stake of 30 percent stake in each project.

In the case of the Libra field, Shell and Franceís Total will control 20 percent apiece, while the China National Petroleum Corporation and the China National Offshore Oil Corporation will each have a stake of 10 percent.

The members of the consortium will hand over to the Brazilian government 41.65 percent of the profit from oil produced once the companiesí initial investment is recouped.

The agreement has a term of 35 years and the Libra wells are expected to start producing in 2019.

Libra, located in the Santos Basin 183 kilometers (114 miles) from the coast, is estimated to contain between 8 billion and 12 billion barrels of oil equivalent.

Developing the field will require an investment of more than $46 billion, according to Brazilís National Petroleum Agency, or ANP.

The Brazilian government stands to receive $138.2 billion in royalties from the Libra concession as well as $276.5 billion worth of oil, ANP chief Magda Chambriard says.

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