October 21, 2013

BRAZIL: Security Tight Before Brazil Offshore Oil Auction

Brazilian soldiers stand guard in front of the hotel where Brazil's National Petroleum Agency (ANP) will auction drilling rights.
Yahoo news
written by AFP staff
Sunday October 20, 2013

Brasilia - About 40 soldiers armed with rifles patrolled Sunday outside a hotel on the western outskirts of Rio de Janeiro a day before a coveted oil field auction takes place there.

Two Navy ships are anchored in front of the hotel, located in the Barra da Tijuca borough and by Monday, there will be 1,100 uniformed military and police responsible for securing the neighborhood, authorities said.

Rio officials requested the security forces amid concerns over possible demonstrations by oil workers, who have been on strike for four days to protest the auction of the Libra oil field and to demand wage increases.

Starting at midnight, streets around the hotel will be closed to the public and blocked by police, according to the G1 news website.

Eleven oil companies, including some of the world's largest, are participating in the auction, the first involving the huge so-called "pre-salt" oil deposits found six years ago in deep water off Brazil's Atlantic coast.

Strikers oppose the government's decision to allow foreign and private firms to bid on the concessions.

In the city center, a group of strikers camping outside the headquarters of the state-controlled Petrobras oil company held up placards that read "No to privatization."

The National Oil Workers Federation, or FUP, called a rally for Monday in Brasilia outside parliament, where laborers have set up camp.

Union leader Joao Antonio de Moraes also announced that FUP and company management leaders were set to conclude negotiations by Monday morning at Petrobras headquarters.

The Libra field is estimated to hold eight to 12 billion barrels of recoverable crude, or nearly a million barrels a day for five years, according to Brazil's National Petroleum Agency.

US oil giants have shunned the auction, seeing too much state intervention with Petrobras granted sole operator status and a minimum 41.6 percent of any oil produced going to the state. Also, Petrobras would have a 30 percent stake in any consortium under a 2010 law.

But seven of the bidders rank among the world's biggest oil companies by market capitalization: second-ranked China National Petroleum Corporation (CNPC), number three Anglo-Dutch Shell, Colombia's Ecopetrol, Petrobras, France's Total, China National Offshore Oil Corporation (CNOOC) and Spain's Repsol/China's Sinopec.

Finance Minister Guido Mantega said this week that Libra is expected to attract $180 billion in investment over the next 35 years.

The winner will be the company or consortium that offers the most oil to the Brazilian state.

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