Brazil to hold oil auction in October, 1 month early -GloboNews

Thu May 23, 2013 1:56am EDT

* Production-sharing auction to be 1st under 2010 law

* Sale to offer some of most promising offshore areas

* Govt. include giant Libra prospect in sale -GloboNews

RIO DE JANEIRO, May 23 (Reuters) - Brazil will hold an auction for rights to explore some of its most promising offshore oil and natural gas areas in October, one month earlier than expected, the GloboNews 24-hour TV news channel reported on Thursday.

The auction date has been moved up to capitalize on strong demand for high-risk frontier areas at a May 14 auction, the first in Brazil in five years, GloboNews said in an unsourced report.

Last week's auction sold 142 exploration areas to 39 companies from 12 countries for 2.82 billion reais ($1.4 billion) in cash and promises to invest a minimum of 7 billion reais.

Brazil also plans to include the giant Libra prospect among the areas on offer in October, GloboNews said. Libra holds about 16 billion barrels of recoverable oil, according to Brazil's oil agency, the ANP, which discovered oil in the prospect in 2010.

That's enough to supply all U.S. oil needs for more than two years and about equal to Brazil's current proved reserves.

The planned auction will be the first under a 2010 law that increased state control over resources in the offshore Campos and Santos Basins northeast and south of Rio de Janeiro.

The areas on offer will be in the so-called Subsalt Polygon, home to giant discoveries where oil is trapped in undersea reservoirs by a layer of salt as much as 7,000 meters below the ocean surface.

The Polygon covers nearly all unleased areas in the Campos and Santos basins, regions where existing leases already produce more than 80 percent of Brazil's oil. The Polygon may hold as much as 100 billion barrels of oil, according to the Brazilian Petroleum Institute of Rio de Janeiro-State University.

The press offices of Brazil's Presidential Palace and oil regulator, the ANP, did not answer calls outside of business hours.

The ANP, which will manage the auction, has scheduled a media conference for Thursday at noon local time (1500 GMT) to discuss the outlook for oil in the area being auctioned. The government will announce the changed auction timing at the event, GloboNews said.

Under the 2010 law all new leases in the Polygon will be production-sharing contracts. The winning companies or groups will be those that offer Brazil's government the largest share of oil and gas output to sell on its own account through a new state-owned oil-marketing company.

State-controlled oil company Petroleo Brasileiro SA, or Petrobras, will also be required to take a minimum 30 percent stake and pay at least 30 percent of all investment in the Subsalt Polygon blocks.

Petrobras will also be the only company allowed to act as operator of the new areas, meaning it will have the lion's share of control over how they are explored and developed.

In previous auctions, and in the auction earlier this month, winning companies or groups won ownership of all output from their leases, but have to pay a royalty on production.

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