Economy

Brazil judge suspends pre-salt oil auctions set for Friday

Brazil judge suspends pre-salt oil auctions set for Fridayā€¯

The country is set to auction the blocks located in the Atlantic Ocean during the first such event in four years.

Brazil earned 6.15 billion reais ($1.88 billion) in signing bonuses for the six fields that it awarded in the auction.

Brazil now has 14 billion barrels of proven reserves, according to the National Agency of Petroleum, known as the A.N.P.in Portuguese.

Winners were determined according to the percentage of profit oil pledged to the government in production sharing agreements.

Exxon, in a consortium with Norway's Statoil and Portugal's Petrogal, a unit of Galp Energia, won another. So I would be surprised if it is not competitive. I was very satisfied.

"Brazil has returned to the oil and gas exploration stage in style".

President Michel Temer said development of the blocks would lead to 100 billion reais (23.52 billion pounds) in investment from the winning companies and 130 billion reais in royalties and other revenues for the cash-strapped state.

Exxon Mobil set the stage for its bids in this round in September, when the U.S. oil major won 10 blocks near the pre-salt in another auction. But they come with the challenge of operating in the deep Atlantic as well as that of the depressed state of global oil markets.

The Anglo-Dutch oil major won one area in a consortium with France's Total SA (TOTF.PA), another with Petrobras and Repsol-Sinopec, and a third with Qatar Petroleum International (QPI) and China's CNOOC.

This time, the Temer changed the rules to encourage investment.

"We see the government of Brazil being more supportive of foreign companies entering Brazil", BP Latin America President Felipe Arbelaez said after the rounds.

Oil experts say a key reason for the interest was that exploration in the deepwater oil fields - known as pre-salt, for their blanket of salt - has become less risky and cheaper over the years.

This freed up Petrobas, which retained a preemptive right to select blocks, while opening the door wider to foreign partners. Sixteen companies signed up to take part in the auction, including most of the major American and European companies.

The injunction was sought by the leftist Workers Party and could easily be overturned on appeal, as is often the case in Brazil.

In his ruling to stop the auction, de Sales said that there was "plausibility" in the arguments requesting an injunction and that he was acting to avoid "any possibility of damage to public assets - especially given the values involved".



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