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Latin America data package concerning the Libra feld. the oil, but pay royalties of at least 10% fear that local industry will not be able

Of these 11 companies, seven can be on production. to fulfll demands and meet deadlines, considered supermajors because of their João Carlos França, President of the thus slowing down Libra’s development, market value, according to Bloomberg/ Brazilian Petroleum Institute (IBP) had possibly even delaying Libra’s produc-

PFC Energy estimates as of Dec. 12 2013. this to say: “What surprised me was tion startup, which would also delay any

The fact that they paid the participa- Exxon not participating. But every com- proft gains. By contract, the minimum tion fee does not necessarily confrm pany has its strategy. Libra is very large, local content during the exploratory that they would defnitely participate it demands high investments, with high phase is set at 37%. During the EWT, in the auction and the payment fee was risk and many regulatory uncertainties this drops to 15%. For the development compulsory and individual to each com- in the sharing model. It’s not known how phase modules to begin by 2021, local pany, even those wishing to submit bids the PPSA will perform managing the content requirements reach 55% and for through a consortium. Therefore, some felds. It’s a great doubt.” development phase modules beginning of the companies listed could choose The PPSA may be viewed with skepti- in 2022 this increases to 59%. President to forfeit the fee and not participate in cism and considered a risk by some, but Dilma Rouseff announced in September, the auction and some did just that, with the fact is that the company was cre- that the development of the Libra pre-salt

Repsol pulling out of the auction at the ated specifcally to manage the pre-salt feld would require between 16 and 18 last moment. Mitsui and Petronas failed resources effciently. The risk is still new rigs or FPSOs in order to reach the to deposit fnancial guarantees and also there, yet by choosing a CEO with a goal of producing 1 million boe/d. This didn’t participate. With the high invest- technical background instead of a politi- goal has since been raised to 1.4 million ments involved, which include EWTs cal appointee, Brazilian President Dilma boe/d. Between 60 and 90 support ves- and other feld development costs, along Rouseff showed how seriously the PPSA sels are also forecast to be required.

with around US$7.5 billion (R$15 bil- is being taken by the Brazilian govern-

Libra Auction Result lion) as bonus on signing the 35-year, ment. This is an important indicator that non-renewable E&P contract, virtually the government expects the PPSA to keep With the frst pre-salt auction scheduled guaranteed that the companies involved a tight managerial and supervisory con- to take place at a hotel located in Barra will form consortiums, with no company trol over the winning consortium in order Beach on the west side of Rio de Janeiro competing individually. The ANP has to guarantee that the oil costs, in terms during a commercial holiday on Oct 21, estimated that it could take as much as of CAPEX and OPEX do not skyrocket, 2013, the Brazilian government made

R$400 billion to develop the Libra feld. which could adversely affect the amount comprehensive security plans in order

Brazil’s

When the rules were changed in 2010, of oil delivered to Brazil, and to the win- to impede demonstrators from reaching many local and international oil industry ning consortium. the event venue. Workers and Teacher’s leaders and analysts expressed concern Local content requirements for equip- demonstrations have been commonplace that the production-sharing model would ment and services also pose serious in Brazil during the last six months and reduce investment interest in Brazil’s pre- concerns to major players. According although they usually end in some form salt provinces, which include areas in the to executives from major oil companies of confrontation with security forces, and other new rules, such as the pro- Santos, Campos, and Espirito Santo Basins. operating in Brazil, there is a growing the fact that these demonstrations are duction-sharing scheme, were designed After the rules were confrmed allowed shows that democ- to attract other state-owned players, in for the Libra auction, more racy in Brazil is solidly detriment to the international supermajor than 200 requests for changes rooted. Before the bidding players, which are mostly private com- were made and turned down round started, there were panies. The reasons for this preference is by the ANP, who said the area’s demonstrations by oil that these state-owned players participat- size and potential meant that workers and others totaling ing in the auction, having signifcantly the government could charge around one hundred per- less, if any, experience in operating almost anything it wanted for sons, about 500m from the deepwater pre-salt felds, are therefore the rights. “Libra is beyond venue, where the security more agreeable to Petrobras’ operational any possible comparison now- cordon was placed. There control, and the signifcant fact that these adays to other fields,” said were also confrontations, state-owned players are more interested Magda Chambriard during a with some demonstrators in obtaining the physical oil than in the global road show to promote and also some of the 1,100 profts from oil sales, because they need the auction. “If companies soldiers used as security the oil for their own national develop- participate, it is because they suffering slight injuries. All ment. Petrobras still considers it impor- see potential value. This is this happened as holiday tant to have experienced players in the the biggest auction in 30 to beachgoers sunbathed and

Libra consortium, and the operator has 40 years around the globe.” surfed along the beach. expressed its contentment that Shell and Brazil’s government expects to Which highlights the fact,

Total were in the winning bid, due to the receive around US$300 billion that even will all of its vast experience these companies have in in royalties and other taxes social problems, Brazil is a deepwater E&P. from Libra over 30 years. Oil solid democracy.

Eleven companies agreed to the rights in the rest for Brazil’s Back at the event venue auction terms and paid the roughly post-salt plays will continue to at the Windsor Hotel, there

US$1 million (R$2 million) participa- be sold on a concession basis, was a bit of an anticli-

ANP’s Magda Chambriard and President Dilma Rousef

Photo: Alberto Stuckert Filho tion fee, after which they received the where oil companies own all max, as in the end only oedigital.com January 2014 | OE 61 000-OE0114_LatinAm_Presalt.indd 61 12/19/13 4:17 PM