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  HOME | Brazil (Click here for more)

Consortium Made Up of Petrobras, Repsol, Shell Awarded Brazil Deepwater Block

RIO DE JANEIRO – A consortium led by Brazilian state oil company Petrobras and also consisting of Spain’s Repsol and Royal Dutch Shell was awarded the rights to develop one of eight coveted pre-salt blocks on offer in an auction on Friday.

That consortium pledged to provide the government 80 percent of all crude extracted from the so-called Entorno de Sapinhoa block, a 213.9-sq.-kilometer (82-sq.-mile) area located in the Santos Basin off Brazil’s southeastern coast.

The other company competing for the license, OP Energia, only offered to give the Brazilian government 21.2 percent of its production.

The National Petroleum Agency (ANP, Brazil’s oil regulator), which organized the auction, had said the winner of the auction would be the bidder that offered the Brazilian government the largest share of output, as long as it exceeded 10 percent.

The consortium, in which Petrobras has a 45 percent stake, Shell has 30 percent and Repsol 25 percent, also pledged to pay 200 million reais ($62.5 million) for the license.

Until Friday, Brazil’s government had only offered one license to develop crude oil and natural gas in the pre-salt region, so-named because its reserves – estimated at tens of billions of barrels of crude equivalent – are located under water, rocks and a shifting layer of salt at depths of up to 7,000 meters (22,950 feet) below the surface of the Atlantic Ocean.

In that initial auction in October 2013, the government awarded the rights to one giant deepwater field, known as Libra, to a consortium that was led by Petrobras (with a 40 percent interest) and also made up of multinationals Total (20 percent) and Shell (20 percent) and China’s CNPC (10 percent) and CNOOC (10 percent).

Besides Petrobras, the other companies authorized to bid in Friday’s auction are Texas-based ExxonMobil, Anglo-Dutch Shell, London-based BP, France’s Total, Norway’s Statoil, China’s CNODC, Repsol and Portugal’s Petrogal.

The ANP estimates that the companies awarded the rights to develop the eight pre-salt areas will need to invest at least $36 billion to begin operating.

 

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