Brazil Auctions Off Rights to Massive Oil Field

RIO DE JANEIRO, BRAZIL - OCTOBER 18: People stand in front of state oil company Petrobras headquarters after Brazil's oil workers went on strike on October 18, 2013 in Rio de Janeiro, Brazil. Petrobras oil workers are calling for increased pay and for a stop to a planned auction next week of a share of the production rights to the huge offshore Libra oil field. Union leaders say that the about 90 percent of Petrobras' workers are on strike. 
National Journal
Clare Foran
Add to Briefcase
See more stories about...
Clare Foran
Oct. 22, 2013, 3:34 a.m.

Brazil auc­tioned off ex­plor­a­tion rights for a ma­jor oil field off the coast of Rio de Janeiro on Monday to a host of for­eign bid­ders, in­clud­ing Europe’s Roy­al Dutch Shell and China’s Cnooc Ltd. and China Na­tion­al Pet­ro­leum, The Wall Street Journ­al re­ports (pay­wall).

The field, which is known as Libra, is es­tim­ated to con­tain up to 12 bil­lion bar­rels of re­cov­er­able oil. If this proves to be true, Libra would be poised to be­come one of the largest oil fields in the world.

State of­fi­cials say the auc­tion holds the prom­ise of trans­form­ing Brazil from a net im­port­er of oil to a net ex­port­er, a move which would rep­res­ent sig­ni­fic­ant fin­an­cial gains for the coun­try. “The Libra auc­tion is a land­mark in the his­tory of Brazil, trans­form­ing a lim­ited re­source, oil, in­to an un­debat­able gain,” Brazil’s Pres­id­ent Dilma Rousseff said Monday.

Large num­bers of Brazili­ans, however, are protest­ing the sale of ex­plor­a­tion rights to for­eign com­pan­ies.

Pet­ro­bras, a Brazili­an en­ergy com­pany, will have a stake in the re­serves and Brazil is cre­at­ing a new state-run com­pany, Pet­ro­leo Pres­al SA, to su­per­vise ex­plor­a­tion in a bid to pro­tect do­mest­ic in­terests. Brazili­an of­fi­cials have also man­dated that for­eign com­pan­ies with a stake in the field pay $7 bil­lion to Brazil’s Treas­ury up front.

A num­ber of ma­jor U.S. and European oil com­pan­ies with deep-wa­ter drilling ex­per­i­ence de­clined to par­ti­cip­ate in the auc­tion, in­clud­ing Ex­xon Mo­bil, Chev­ron, and BP. Ana­lysts say the firms may have been hes­it­ant to bid on the re­serves due to the terms and re­stric­tions im­posed on the sale by Brazili­an of­fi­cials.

The deal is likely, however, to strengthen eco­nom­ic ties between Brazil and China, which now has a ma­jor stake in the oil field. “It makes sense for China be­cause China needs to se­cure en­ergy re­sources, and can spare the massive in­vest­ments, mean­while Brazil doesn’t have the sav­ings and needs the in­vest­ment,” said Charles Tang, chair­man of the Brazil-China cham­ber of com­merce.

What We're Following See More »
DECLINES TO HEAR APPEAL
SCOTUS Leaves Political Ad Disclosure Law In Place
3 hours ago
BREAKING

The Supreme Court on Monday declined to hear an appeal to the "federal disclosure rules for political advertising," leaving in place the ruling by a lower court upholding a law requiring the disclosure of donors to political ads. The appeal came from "a Denver-based libertarian think tank that wanted to run an ad without being forced to divulge its major donors," which argued that the requirement was a violation of first amendment rights under the Court's Citizens United decision.

Source:
ENLISTS THEIR HELP IN REPEAL/REPLACE
Trump Meets with Health Execs
3 hours ago
THE LATEST
WOULD CUT NON-DEFENSE BY SAME AMOUNT
Trump Budget Would Bump Defense Spending by $54 Billion
4 hours ago
THE DETAILS

"The Trump administration is proposing a budget it says will increase defense spending by $54 billion and cut non-defense spending by the same amount. The White House is sending a topline budget proposal reflecting those figures to federal agencies on Monday afternoon, according to an Office of Management and Budget official." An unnamed OMB official said most federal agencies would face cutbacks.

Source:
WILL THE DINNER HAPPEN?
Trump To Skip Correspondents Dinner
7 hours ago
THE DETAILS

Donald Trump announced in a tweet on Saturday that he would not attend the White House Correspondents' Association dinner in April. The move did not come as a surprise, another moment in his ongoing battle with the media, which he has dubbed the "enemy" of the American people and repeatedly refers to as "fake news." Multiple outlets have already cancelled their events surrounding the dinner and several are considering skipping the event outright.

FOLLOWS ARMY SECRETARY
Navy Secretary Nominee To Withdraw
7 hours ago
THE DETAILS

Phillip Bilden, Donald Trump's nominee for Navy secretary, has decided to withdraw his nomination after he was unable to sufficiently untangle his financial commitments. Bilden follows Vincent Viola, who withdrew his nomination for Army secretary.

Source:
×
×

Welcome to National Journal!

You are currently accessing National Journal from IP access. Please login to access this feature. If you have any questions, please contact your Dedicated Advisor.

Login