* Dearth of auctions has curtailed oil exploration
* Brazil wants shale gas exploration, auction possible
* Gov't insists energy crisis not imminent despite drought
By Leonardo Goy
BRASILIA, Jan 10 Brazil will go ahead with its
first oil exploration auction in five years in May, Energy
Minister Edison Lobão said on Thursday, as the government tries
to play down the threat of an energy crisis in Latin America's
In addition, another auction for oil rights in the vast
sub-salt region off Brazil's southeastern coast will take place
in November under a new regulatory framework for the industry,
Lobão added. He said President Dilma Rousseff had authorized the
Private oil companies consider new concession offers
essential to continue operating in Brazil, but some doubted the
government would go ahead with the May auction when it was
announced in September because Congress had still not passed a
law defining how oil royalties would be used in the country.
The law was passed in November, in theory removing the main
obstacle to offering new concessions, although Rousseff vetoed
part of it.
"The royalties are no longer an issue," Lobão told reporters
Two blocks have been excluded from the initial offering of
174 onshore and offshore blocks in May, however, due to
environmental considerations, the director general of Brazil's
ANP oil regulator Magda Chambriard said.
Speaking alongside Lobão, Chambriard said Brazil is trying
to decentralize petroleum exploration. There is much potential
in under-explored basins such as Parnaíba as well as in the
northeastern states of Maranhão and Piauí, she said.
The lack of oil auctions in Brazil following the 2007
discovery of giant offshore sub-salt reserves near Rio de
Janeiro has forced companies such as Exxon Mobil, Royal
Dutch Shell, and Devon Energy Corp to reduce
Smaller companies are even worse off without fresh
opportunities in what was once considered one of the world's
most promising oil frontiers.
Shell is among the firms that plans to participate in the
May auction, which will likely offer part of the so-called
"Equatorial Margin" ruling along Brazil's northeast coast.
The subsalt area, defined in a new law that will apply to
the November auction, includes a New York-sized zone near Rio
and Sao Paulo. It contains about 100 billion barrels of
recoverable oil, according to the National Oil Institute, enough
to provide all current U.S. oil needs for about 14 years.
"NO GAS SHORTAGE" BUT DIVERSIFICATION SOUGHT
Though they represent a country with vast oil potential,
Lobão and Chambriard spoke in the midst of what could become
Brazil's worst energy crisis in more than a decade.
Hydroelectric reservoirs are at their lowest levels in 10 years.
A drought has forced the country to rely more on
thermoelectric plants, and Lobão insisted there is no shortage
of natural gas to power them. He and Rousseff have dismissed
talk of possible energy rationing.
"The gas law states that the Ministry of Mines and Energy
must always seek ways to increase the gas supply, but today
there is no shortage of gas... the gas we don't produce here we
import," Lobão said.
Energy traders, however, say Brazil is paying top dollar for
emergency imports of liquefied natural gas (LNG) at a time of
strong demand for the fuel from Asian countries.
Brazil's energy matrix is much more diverse than it was
during the last major energy crisis in 2001, when power outages
cut factory output and overall economic growth. The reliance on
hydro-power has dropped from about 75 percent to 67 percent in
the last five years, but Brazil is trying to further diversify.
Brazil now wants to develop a shale gas industry, and Lobão
said an auction for exploration rights could occur in 2013,
although likely not until December.
ANP's Chambriard said Brazil's shale gas reserves have not
been mapped, but studies indicate the fuel is present in the
Parecis, Maranhão, Piauí, Tocantins and São Francisco basins.