Petrobras-led group wins Brazil oil tender
RIO DE JANEIRO - Reuters
![Petrobras-led group wins Brazil oil tender](http://image.hurimg.com/i/hurriyet/75/0x0/59c8294f45d2a027e83b722f.jpg)
Brazil’s oil agency head Magda Chambriard and Energy Minister Edson Lobao. AFP photo
Brazilian state-run energy company Petrobras teamed up with European oil majors and Chinese rivals on Oct. 21 to buy the country’s biggest-ever oil field with a lone bid at the minimum price, a disappointing outcome for a sale that was supposed to launch Brazil as a petroleum power.The auction, which proceeded as hundreds of protestors criticized the sale to private companies of the country’s natural resources, was notable because it sparked only a fraction of the appetite that was originally expected. Rather than attract multiple bidders and the many global energy players who had long expressed interest in fast-growing Brazilian discoveries, the auction for the giant offshore Libra oil area drew just one tepid bid from a consortium offering the minimum price allowed.
Petrobras took 40 percent of the field in the auction, more than the minimum 30 percent that it was guaranteed by law. France’s Total and Anglo-Dutch Royal Dutch Shell will each have 20 percent of the partnership, while China National Petroleum Corp and China’s CNOOC took 10 percent a piece.
Highlighting the lackluster interest by most major oil companies in the auction, the companies agreed to give the government the minimum legal amount of so-called “profit oil” from the fields - or oil produced after initial investment costs are paid. Under the terms of a new production-sharing contract, that minimum was set at 41.65 percent of profit oil.
Though hailed by the government as the start of development for its largest-ever oil discovery, the sole bid reaffirmed the fact that most multinational oil companies were turned off by the auction. Despite the huge potential of the offshore region, many foreign oil producers and other potential investors shied away because they believed the rules for the new concessions offered little upside for profit and too big a role for the government and Petrobras. Shares of Petrobras, a company whose investors have grown increasingly frustrated by cost overruns and production delays, surged after details of the bid emerged and dispelled fears that the company would overpay.