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* BG Group, OGX, Total, BP among winners at Brazil auction
* Sale comes after years of sluggish oil growth, rising debt
* Last auction held in 2008 after which oil interest waned
* U.S., European companies rush in, but Asians wary
By Jeb Blount
RIO DE JANEIRO, May 15 (Reuters) - For the first time in nearly five years, Brazil's flagging oil industry has received serious interest from private investors.
Brazil's oil agency, the ANP, sold 142 exploration areas to 39 companies from 12 countries on Tuesday, wrapping up the scheduled two-day auction in just one day. It was the first auction since a decade of annual sales ended in 2008.
Companies such as Britain's BG Group Plc and BP Plc , France's Total SA, U.S.-based Exxon Mobil Corp and Chevron Corp, and Brazil's OGX Petroleo e Gas SA helped boost auction returns to a record 2.82 billion reais ($1.4 billion) in cash.
The ANP expects the winners to invest about 7 billion reais in exploration over about five years. Most of the areas are in high-risk frontier regions with little or no oil output.
Brazil has failed to live up to its promise to become a major new producer as increased government intervention and a new regulations discouraged foreign and domestic private investors. Oil production has stagnated and imports have risen.
But analysts said the results of the auction showed Brazil was simply too big to ignore.
"Sure, Brazil messed up, but the auction puts things in perspective," said Cleveland Jones, an oil geologist and mathematician with the Brazilian Petroleum Institute at Rio de Janeiro-State University. "Brazil has huge potential and is a much less risky place than Nigeria, Venezuela or Russia."
Brazil's undiscovered oil reserves in the Campos and Santos basins, an extension of the area where giant reserves were found in 2007, might contain as much as 100 billion barrels, he said, enough to meet the world's needs for about three years.
The ANP estimated the amount of oil on sale at Tuesday's auction at about 35 billion barrels in place.
Among the biggest winners were Britain's BG Group Plc , which offered to pay 416 million reais for stakes in 10 blocks, Brazil's OGX Petroleo e Gas SA, which will pay 376 million reais for stakes in 13 blocks, and France's Total SA, which agreed to pay 372 million reais for a share in 10, according to Reuters and preliminary ANP data. Companies from Australia, Norway, Colombia and Spain also won.
Since the last auction, Brazil has had trouble fulfilling its potential as an oil power.
In 2008, state-controlled Petroleo Brasileiro SA, or Petrobras said it would spend $112 billion over five years to boost output 50 percent to almost 3.5 million barrels a day in 2012, an amount that would have seen it pass Mexico and Venezuela as Latin America's top producer.
However, production rose only 13 percent in the five years to about 2.68 million barrels, while Petrobras' shares are worth less than they were before the huge 2007 discoveries.
Petrobras agreed to pay 540 million reais for stakes in 35 blocks, the largest of all winning bidders on Tuesday, but proportionally less than in previous auctions.
Non-state companies have also been hit hard. Chevron Corp and its drilling contractor, Transocean Ltd face about $20 billion in civil lawsuits for a 3,500 barrel oil spill in 2011, even though the ANP said there was no discernible environmental damage and that Chevron cleaned up quickly.
Despite these difficulties, Chevron jumped in on Tuesday to pay 31.4 million reais for a stake in a block.
The auction may help Brazil break out of a cycle of negative news and provide companies with the future reserves needed to keep investment flowing, said João Carlos de Luca, head of the IBP, Brazil's petroleum industry association.
"I think we can put a lot of the difficulties of the last few years behind us," he said. "Demand was very strong at the auction; about 40 percent above my own estimates."
In the end, the world's growing demand for oil and Brazil's relative appeal as an oil frontier drew investors back.
After an anxious lead-up to the auction, the government was very pleased by the soaring bids.
"We never saw anything like this," Marco Antonio Martins Almeida, the oil secretary at Brazil's energy ministry said on Tuesday.
Brazil's OGX Petroleo e Gas SA, hurt by unfulfilled promises, came out of the auction looking stronger. Controlled by Brazilian billionaire Eike Batista, OGX shares soared on optimism about Brazil's potential, only to slump to near penny stock levels as output failed to meet targets.
OGX won 13 blocks at auction, 10 for itself alone and three in partnership, and was the main partner in the auction for Exxon Mobil Corp, the No. 1 U.S. oil company.
Exxon picked up 50 percent stakes in two blocks with OGX for 63.9 million reais, according to Reuters and the ANP - a sign the oil giant has a level of confidence in OGX that many of its shareholders do not, the IBP's de Luca said.
OGX was up more than 5 percent during Sao Paulo trading on Wednesday afternoon after rising 5.4 percent on Tuesday.
Exxon's return comes after a frustrating failure in Brazil during the auction hiatus. It was one of the few companies in the most coveted areas of the Campos and Santos basins not to strike oil. Worst still, its dry areas were adjacent to some of the largest discoveries.
Chevron and Exxon might be back, but Brazil could still face a struggle.
The discovery of huge U.S. shale oil and gas deposits and the development of deepwater resources in the Gulf of Mexico means Brazil has more competition, said João Augusto de Castro Neves, a senior Brazil analyst for Eurasia Group in Washington. Devon Energy Corp, for example, pulled out of Brazil in 2011 to concentrate on U.S. shale.
However, that could provide the incentive needed to push the government to improve the investment climate.
"That sense of urgency has changed," Castro Neves told Reuters. "They are pretty cognizant of the world in terms of the shale revolution and other new discoveries. Plus, the last two years, they've had slow economic growth in Brazil, where the oil sector remains very important. The government is keen on getting these investments off the ground."
However, one group that stayed away was oil companies from fast-growing Asian nations. Only Malaysia's Petronas, which recently bought a stake in an OGX field, was very active, but it won no blocks.
"I think the Chinese and Asian oil companies want reserves with more promise of fast development," the petroleum association's De Luca said. "These frontier areas will take time to develop."
He expected Asian companies to show up for an auction in November, with stricter rules, greater state control and Petrobras control. The areas will be near the huge discoveries of 2007 that started it all for Brazil.