Brazil plans to auction off stakes in one of the world's largest offshore oil fields on Monday, in a move that will yield billions of dollars for government coffers, but which is drawing popular opposition because of the participation of foreign oil companies.
Brazil
plans
to auction off stakes in one of the world's largest offshore oil fields on
Monday, in a move that will yield billions of dollars for government coffers,
but which is drawing popular opposition because of the participation of foreign
oil companies.
President Dilma Rousseff and her Workers' Party expect the development of the
field to fuel economic growth, creating jobs and funding improvements in
education and health care demanded by millions of street protesters earlier
this year.
The Libra field is estimated to hold eight billion to 12 billion barrels of
recoverable oil and to generate $1 trillion in government revenue over 30
years, say local oil regulators.
Eleven companies, 10 of which are foreign, have registered for the auction,
including Chinese government-run concerns Cnooc Ltd. and China National
Petroleum Corp.,
France
's
Total SA and Royal Dutch Shell PLC.
Still, some of the world's largest oil groups, including Exxon Corp., have
stayed away. In part, that reflects major shifts of emphasis in the global
energy industry, with hydraulic fracturing technology unlocking enormous
natural-gas reserves in the
U.S.
and
emerging production areas that are drawing industry interest in
Africa
.
But critics say another factor discouraging some is the model
Brazil
's
government will use for the Libra auction. They say it reduces oil companies to
just financial partners, unable to use their expertise and technology to
squeeze more profit from the field because Brazil's state-owned oil company
Petroleo Brasileiro SA, known as Petrobras, will lead development.
"The oil industry doesn't lack for areas to put money into, and most of
those areas have none of these crazy rules and very tight [profit]
margins," said Cleveland Jones, researcher at
Brazil
's
National Oil and Gas Institute at
Rio
de Janeiro
State
University
.
Ms. Rousseff is up for re-election next year and faces some popular dissent
over the sale. Unions representing Petrobras workers started a nationwide
strike Thursday to stop the sale, which they argue will put
Brazil
's
wealth in natural resources into the hands of foreigners.
There is also discontent about high consumer prices, poor public services and
corruption. Anger erupted in June, when millions of Brazilians hit the streets
in protest, sometimes violent, which have lingered since, albeit on a smaller
scale.
"We think the presalt resources should be used to finance solutions to our
social problems," Francisco Soriano, a 70-year-old union leader and
longtime Petrobras employee, said Friday. He was referring to the oil-rich
presalt geological formation on
Brazil
's
continental shelf. Mr. Soriano spoke amid tents set up by social groups as part
of an "Occupy Petrobras" camp in front of the company's downtown
Rio
headquarters.
The protest encampment consists of members of groups representing the homeless
and rural farm workers and features banners that echo slogans such as "The
Oil is Ours!," a national rally cry that led to the creation of Petrobras
60 years ago.
The national pride in Petrobras also plays a part in opposition to the sale. "Petrobras
discovered the presalt. There isn't any other company in the world with more
experience in the presalt than Petrobras," said Walter Bahia, a retiree
who worked on Petrobras' offshore oil platforms for more than 30 years.
Mines and Energy Minister Edison Lobao on Saturday sought to repel some of the
criticism, saying the oil field will produce a vast wealth for
Brazil
, a
large part of which has been designated for health care and education, two
areas at the center of the street protests. He rejected accusations that
Brazil
's oil
industry is being privatized.
Meanwhile, Ms. Rousseff has ordered 1,100 soldiers to seal off the
Rio
hotel
where the auction will take place. And government lawyers continued fighting
legal challenges to the sale over the weekend, according to
Brazil
's
attorney general's office.
Winning bidders will spend about $200 billion over 35 years to pump Libra's oil
out of a reservoir beneath its deep Atlantic waters.
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