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Brazil Troops Clash With Protesters Before Oilfield Auction

Brazil Sends Army to Protect First Pre-Salt Oilfield Auction
A naval boat patrols off the coast as army soldiers block the beach entrance to the Windsor Barra Hotel in Rio de Janeiro on Oct. 21, 2013. Photographer: Dado Galdieri/Bloomberg

Army troops clashed with dozens of protesters at the Rio de Janeiro hotel where the government is auctioning a license for Brazil’s biggest oil prospect.

Security forces shot tear gas at demonstrators waving flags and protesting against the sale of a license for Libra, an oilfield requiring an estimated $184 billion in investments, to international investors.

Soldiers, army vehicles, helicopters and navy ships are guarding the hotel where companies including China National Petroleum Corp., Royal Dutch Shell Plc and Total SA are expected to vie for one of the world’s two largest offshore fields at 3 p.m. local time.

The Libra auction will be the first under a profit-sharing model since Brazil announced the discovery of the so-called pre-salt reserves in 2007 in the biggest discovery this century. The country’s main oil union has been protesting the sale with pickets outside the headquarters of state-run Petroleo Brasileiro SA, or Petrobras, in downtown Rio and strikes that began last week to demand that the state retain control of the field. By law, Petrobras will hold at least a 30 percent stake and will act as operator.

Injuries Reported

The security deployment that began over the weekend follows nationwide street protests that started in June over an increase in bus fares and expanded to include demands for better education and the removal of Rio Governor Sergio Cabral. Protesters last week entered the Energy Ministry in Brasilia.

Masked protesters threw stones at security forces today and tried to set a car alight close to the beach-side hotel, television images showed. Five people were injured in the clashes this morning, GloboNews reported. More than 1,000 security agents and soldiers were deployed for the event, Brazil Justice Minister Jose Eduardo Cardozo told reporters at the hotel in the Barra da Tijuca neighborhood.

Dozens of oil union members burnt trash and criticized the auction by loudspeaker several blocks from the venue. Tear gas was shot onto the beach against protesters as beach goers cleared the area.

Petrobras declined 0.5 percent to 17.84 reais at 2:20 p.m. in Sao Paulo. The stock has lost 8.8 percent this year, compared with a 9 percent drop of Brazil’s benchmark index.

At least 24 injunction requests had been filed in different Brazilian cities through yesterday requesting the suspension of the auction, with at least 18 dismissed by courts, Rio-based newspaper O Globo reported late yesterday, citing the national prosecutor’s office.

Libra is estimated to hold between 8 billion and 12 billion barrels and development will require a 400 billion-real investment ($184 billion) during the 35-year concession, according to Brazil’s oil regulator. That would make it one of the two biggest offshore oil fields in the world together with Brazil’s Lula.

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