Brazil to auction contracts to develop O&G reserves

Rio de Janeiro, May 24:

's first auction of contracts to develop offshore

and gas reserves in the pre-salt region will be held in October, or earlier than previously scheduled, the government said Thursday.

The government's National Council for Energy Policy authorized the change.

Rights to develop blocks in the Libra field, which is estimated to hold between 8-12 billion barrels of recoverable oil, will be on offer in the first bidding round.

Brazil currently has 14 billion barrels of proven reserves.

The Libra field is located some 180 km off the coast of Rio de Janeiro state in the Santos basin.

Bidding will be conducted under a new regulatory framework - approved in 2010 - that guarantees the state a greater share in profits from the highly promising pre-salt fields.

Under the new framework, Petrobras will be the sole operator of production sharing agreements in the pre-salt and will have at least a 30 percent share in the consortiums developing projects in that region.

The government decided to move up the first pre-salt bidding round after netting a record 2.8 billion reais ($1.4 billion) in an auction earlier this month of rights to explore onshore and offshore blocks in less promising areas.

The pre-salt frontier, a series of ultra-deep oil fields that were discovered in recent years and stretch for some 800 km off the coasts of the southeastern states of Espirito Santo, Rio de Janeiro, Sao Paulo and Santa Catarina, could dramatically increase Brazil's proven-reserve tally and transform the country into a major crude exporter.

But accessing those fields, so-named because they are located under, water, rocks and a shifting layer of salt at depths of up to 7,000 meters below the surface of the Atlantic Ocean, will be very costly and pose an enormous technical challenge.

IANS