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Shell signs up for Libra pre-salt auction, but Exxon Mobil, BP and BG keep away

BY JEFF FICK
 
RIO DE JANEIRO -- National Petroleum Agency, or ANP, said that 11 oil companies had registered to participate in the sale of one of the world' s largest offshore oil discoveries, although some of the biggest firms backed out of the auction.

The oil regulator said that a list of the companies that had paid a $886,014 fee and submitted documents by the deadline was not yet available. Royal Dutch Shell, however, confirmed that it was among the 11 companies.

"We have submitted our qualification information and participation fee to ANP, which ensures that Shell is approved to participate in the bid round should we choose to do so," the company said in a statement. Shell said that it was still evaluating the upcoming auction.

The sale of the offshore field, called Libra, is scheduled for October 21 and is expected to draw interest from the world' s biggest oil players, including oil majors and national oil companies from countries such as China. But key players Exxon Mobil, BP and BG Group informed ANP Director Magda Chambriard that they would not participate, an indication that the oil industry could be concerned about high costs and potential losses at Libra despite the size of the discovery.

Libra is estimated to hold between 8 and 12 Bbbl of recoverable crude. The prospect is one of the so called pre-salt oil fields, where billions of barrels of crude were discovered in water 2,000 m deep off Brazil' s southeast coast. The oil deposits, which could make Brazil one of the world' s top 10 oil producers, were found buried more than 5,000 m below the seabed under sand, rocks and a thick layer of salt hence "pre-salt."

The ANP has estimated that it could take as much as $181 billion to develop Libra over the 35 year life of the concession contract. Libra will be the first prospect sold under new rules draw up by the Brazilian government that place development and profits under greater state control. Winning bids will be determined by the amount of profit oil, or oil produced after development costs, that companies agree to give the Brazilian government. The winners will have to pay a signing bonus of $6 billion and partner with Petrobras, which will have a 30% stake in the field and be the field' s operator.

The field of potential bidders could be reduced should some of the companies not have documents approved by the ANP, a spokesman for the regulator said.

Dow Jones Newswires

09/20/2013

 

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