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Brazil and the future of oil in the Americas

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Felipe Dana/AP/File

(Read caption) An oil worker looks at a Petrobras offshore ship platform over Tupi field in Santos Bay off the coast of Rio de Janeiro.

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As bidders registered for the first oil rights auction in Brazil’s pre-salt last Wednesday, the reaction was overwhelmingly pessimistic. Headlines focused on lack of oil majors such as ExxonMobil and BP, and the small number of bidders; 11 as opposed to some 40 expected by the Brazilian government.

Indeed, attention in the run-up to Brazil’s inaugural pre-salt auction has been strikingly dissimilar to the tectonic-shifting announcements of the pre-salt several years ago. Yet with a mix of emerging market and European players, the list of bidders is perhaps a reflection of the nature of exploration and production in the Americas today.

Next month’s auction of blocks in the Libra field is not only the first pre-salt bid round but also the first auction under the revamped hydrocarbons law, which gives greater control over pre-salt development to state-owned Petrobras. The outcome could have far-reaching implications for the future of Brazil’s efforts to exploit the pre-salt reserves. 

The registered bidders include three Chinese firms (CNOOC, CNPC and Sinopec in partnership with Repsol); India’s ONGV Videsh, Japan’s Mitsui & Co., Malaysia’s Petronas, and Colombia’s Ecopetrol, as well as familiar European outfits Shell, Petrogal, and Total. Nothing to sneeze at to be sure, and certainly no reason to give up on pre-salt’s promise.

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