Brazil Invites International Companies to Bid for Offshore Fields

31 May 2009 (Last Updated May 31st, 2009 18:30)

Brazil’s Mines and Energy Minister Edison Lobao has said that the country will call global oil companies to propose for concessions in vast but technically challenging offshore fields starting from 2010. The country had abandoned the concessions in the so-called pre-salt area as the pr

Brazil’s Mines and Energy Minister Edison Lobao has said that the country will call global oil companies to propose for concessions in vast but technically challenging offshore fields starting from 2010.

The country had abandoned the concessions in the so-called pre-salt area as the projected 80 billion barrels of high-quality crude in that new oil frontier lie far below the ocean floor under layers of rock and an unstable salt formation after it was found in 2007.

Since then the Brazilian Government has been setting up new regulations for those recently found Atlantic fields, which pose big technical and financial challenges because of the depth and breadth of the salt, as well as the drastic changes in temperature as the oil is brought to the surface.

Lobao said that Brazil cannot perform the Herculean task of developing the reserves on its own.

“We will certainly be holding auctions next year. This means the oil companies can begin to prepare their treasury reserves,” Lobao said.

Brazil sold many concessions to pre-salt fields before the region’s potential was evident and the government has pledged not to amend those contracts.

Petroleo Brasileiro and its partners Exxon Mobil, BG Group, Galp Energia SGPS SA, Repsol YPF and Royal Dutch Shell will have ample work in the future exploiting these vast deposits.

Several oil industry analysts had expected that the government would be in no hurry to draw up new laws regulating the pre-salt fields, since it would be difficult to get controversial legislation passed before 2010, an election year.

Lobao said that he favours strict terms for new companies drilling in the pre-salt region and also advises the creation of a new company totally under the control of the Brazilian Government.