Oil majors Exxon Mobil (XOM), BP Plc (BP) and BG Group (BG.LN) won't bid in Brazil's sale of one of the world's largest offshore oil discoveries, the director of Brazil's National Petroleum Agency said Thursday.
Oil majors Exxon Mobil (XOM), BP Plc (BP) and BG Group (BG.LN) won't bid
in
Brazil
's
sale of one of the world's largest offshore oil discoveries, the director of
Brazil
's
National Petroleum Agency said Thursday.
Representatives of the three companies informed ANP Director Magda Chambriard
of their decision via telephone, she said. The companies cited internal
strategies for the decision not to pursue a stake in the Libra prospect, which
is estimated to hold between 8 billion and 12 billion barrels of recoverable
crude.
The decision by three major oil companies not to participate could indicate
concerns about high costs and potential profits at Libra despite the size of
the discovery. The sale of Libra, set for Oct. 21, is expected to draw interest
from the world's biggest oil players, including oil majors and national oil
companies from countries such as
China
.
As of late Wednesday, 12 companies have registered for the auction, although
ANP officials are still sorting through paperwork that could push the number of
potential bidders higher, Ms. Chambriard said.
Libra is one of the so-called pre-salt oil fields, where billions of barrels of
crude were discovered in water 2,000 meters deep off
Brazil
's
southeast coast. The oil deposits, which could make Brazil one of the world's
top 10 oil producers, were found buried more than 5,000 meters below the seabed
under sand, rocks and a thick layer of salt - hence "pre-salt."
The ANP has estimated that it could take as much as 400 billion Brazilian reais
to develop Libra over the 35-year life of the concession contract.
Libra will be the first prospect sold under new rules draw up by the Brazilian
government that place development and profits under greater state control. Winning
bids will be determined by the amount of profit oil, or oil produced after
development costs, that companies agree to give the Brazilian government. The
winners will have to pay a signing bonus of BRL15 billion and partner with
Brazilian state-run energy giant Petroleo Brasileiro (PBR, PETR4.BR), or
Petrobras, which will have a 30% stake in the field and be the field's
operator.
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