Brazil Limits First Pre-Salt Oil Auction to Libra Field

Brazil’s first auction for the so-called pre-salt region that holds the country’s largest discoveries will be limited to one field, the government said.

Brazil’s oil regulator, known as ANP, will conduct the bidding round in October, according to a statement in the official gazette published today. The auction will be Brazil’s first to use a profit-sharing model that was approved by Congress in 2010, according to the statement.

The Libra field, located in deep waters of the Atlantic Ocean near Tupi, Brazil’s largest discovery, holds an estimated 5 billion barrels in recoverable reserves, making it the country’s second-biggest discovery. Brazil’s most productive wells are located in the pre-salt region, where oil is trapped miles below the seabed under a layer of salt.

Petroleo Brasileiro SA (PETR3), the state-controlled company, is required by law to operate all new concessions in the region with a minimum 30 percent stake. In March the ANP said it would auction areas holding about 10 billion barrels of recoverable reserves in the pre-salt region in November.

The region as a whole has surpassed the company’s output targets. In 2010 Petrobras, as the world’s biggest producer in waters deeper than 1,000 feet (304 meters) is known, planned to be pumping 241,000 barrels a day from the pre-salt by 2014. In March Brazil’s pre-salt oil and gas output reached 349,600 barrels a day, according to the ANP.

To contact the reporter on this story: Peter Millard in Rio de Janeiro at pmillard1@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.