Brazil raises R31.85 billion in oil auction

December 20, 2021

Brazil raised nearly $2 billion (~R31.85 billion) Friday with the auction of two large oil blocks, drawing bids from major international firms after struggling recently to generate interest in its offshore fields.

Total and Shell were among the companies in the winning consortiums for the "pre-salt" blocks off the coast of Rio de Janeiro, which had gone unsold at a previous auction in 2019.

To entice bidders, Brazil slashed its exploration rights fee by 70 percent.

The auction was "an extraordinary result for Brazil," said Ricardo Saboia, director general of the National Petroleum Agency (ANP).

"The big news is that we managed to draw competitive bidders ... guaranteeing more resources for the Brazilian people," he said in a statement.

Brazilian state oil company Petrobras was the biggest bidder, spending 4.2 billion reais ($750 million).

French group Total and British-Dutch Shell laid out $510 million and $180 million, respectively.

Malaysia's Petronas and Qatar Petroleum meanwhile spent $260 million each for rights to the largest block, Sepia.

Experts say these may be the last "pre-salt" fields Brazil auctions, given the world's increasing reluctance to rely on polluting fossil fuels and pressure on the energy industry to transition toward alternatives.

Located in deep water beneath thick layers of salt, the deposits are potentially huge, but difficult and expensive to reach. 

Environmental groups and fishing communities protested at the Rio de Janeiro hotel where the auction was held, saying the resulting oil exploration would threaten marine life. -fin24

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Last modified on Monday, 20 December 2021 11:42

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