Brazil Transfers 342 Oil Exploratory Blocs to Private Hands

Since 1999, when Brazil’s National Petroleum, Natural Gas, and Biofuel Agency (ANP) held the First Round of Bidding for the Exploration and Production of Petroleum and Gas in Brazilian sedimentary basins, there have been six auctions, resulting in the transfer of 343 exploratory blocs, totaling 230 square kilometers, to private initiative.

According to the ANP, as a direct consequence of the privatizations, "the minimum amount of investments that the concessionaries are obliged to make, pursuant to the contracts signed in the bidding rounds, is expected to reach a total of US$ 19 billion (83% in the phases of development and production) by 2008."

Constitutional amendment number 9, approved by the Brazilian National Congress on November 9, 1995, to provide greater flexibility to the way in which the federal monopoly over the exploration and development of petroleum and natural gas production in the country is exercised, has managed to attract 38 petroleum companies to Brazil.

According to data from the ANP site, exploration is currently underway in 36 blocs in mature basins (Potiguar, Sergipe, Recôncavo, and Espí­rito Santo); 16 blocs in areas with high potential (Santos, Campos, and Sergipe-Alagoas); and 138 blocs in new frontier areas.

The investments involved in exploratory activities in the auctioned areas have a large potential for the creation of employment and income in Brazil.

"Studies indicate the generation of 120,000 new jobs for workers with basic education, 37,000 for those with secondary education, and 28,000 for those with higher education, during the period of the investments that have been reported," the ANP reveals.

The Petroleum Law also created the ANP, the regulatory agency for the Brazilian petroleum sector, as well as the organ in charge of contracting and overseeing the economic activities connected with the petroleum and petroleum derivatives industry.

Nowadays the ANP is also responsible for biofuel, an alternative fuel derived from agricultural crops, such as castor beans, the production and consumption of which is being encouraged by the government.

The seventh round will emphasize the exploration of areas with natural gas potential. The 1,134 exploratory blocs in 34 sectors in 14 sedimentary basins include 509 inland blocks, of which 438 are located in mature basins (the so-called marginal deposits) and 71 in areas considered new frontiers. 625 ocean blocks are also being offered, of which 87 are located in areas with high potential and 538 in new frontiers which have yet to be explored.

With the diversity of the offerings, the ANP hopes to provide opportunities to firms of all sizes and profiles, from small to large, Brazilian and foreign – but, most of all, to create a niche in the country for small Brazilian firms specialized in exploiting marginal fields, the annual production of which comes to between 5 and 6 thousand barrels.

Agência Brasil

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