Brazil Wants Subsalt Winners to Pay Fixed Bonus for E&P Blocks

27 August 2009 (Last Updated August 27th, 2009 18:30)

The Brazilian Government will require successful bidders to pay a fixed bonus when production-sharing agreements are signed for offshore oil concessions, the Estado news agency reported. The premium will be fixed at each auction of offshore exploration and production Brazilian bl

The Brazilian Government will require successful bidders to pay a fixed bonus when production-sharing agreements are signed for offshore oil concessions, the Estado news agency reported.

The premium will be fixed at each auction of offshore exploration and production Brazilian blocks but will not be part of the criteria for picking auction winners.

Brazil is finalising the details of the bonus ahead of new regulatory framework covering the oil and natural gas sector to be launched on 31 August.

Proceeds from the premium payment will be used for a social investment fund to enhance the education system and ease poverty in the country.

The government will select the winning bids on the basis of greatest share of production provided by the company out of the subsalt oil fields.

The subsalt oil discoveries were made in the Santos basin off the coast of Sao Paulo and Rio de Janeiro states.

The oil lies under more than 2,000m of water and a further 5,000m under sand, rock and a shifting layer of salt.

The first of the subsalt discoveries, Tupi, was estimated to hold 5-8 billion barrels of oil equivalent of recoverable reserves.