ENRG - Brazil sells $250MM offshore oil exploration licenses

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Brazil sells nearly $250 million worth of oil exploration licenses

By Michael Astor, Associated Press, 6/20/2001 22:05

RIO DE JANEIRO, Brazil (AP) Brazil raked in more than half a billion reals (nearly $250 million dollars) selling 34 mostly offshore oil exploration concessions at an auction that ended Wednesday.

Companies paid nearly 603 million reals ($245 million) for the concessions in a country where until five years ago, all exploration, production and refining was controlled by state-run Petrobras.

Government officials said the auction was a clear demonstration of international investor confidence in a country that has seen its economy on the ropes in recent weeks thanks to a nationwide electricity crisis and economic turmoil in neighboring Argentina.

''Today the distrust of investors has been overcome. Before, the majority of companies made partnerships with Petrobras. Today, many are competing alone,'' said David Zylbersztajn of the National Petroleum Agency. ''We have clear and irrefutable demonstration that Brazil is going through a temporary crisis and that the institutions continue solid.''

The auction was particularly important for Brazil in a year where foreign direct investment is expected to reach only half of the $30 billion the country received in 2000.

With the privatization of government assets nearly complete and the sale of Petrobras off the table, the oil exploration concessions represent one of the government's few quick sources of cash.

Even so, Petrobras took the lion's share of exploration blocks buying 15 concessions either alone or through joint ventures.

But there was heavy interest from foreign oil companies as well.

Germany's Wintershall Aktiengesellschaft picked up three licenses and US-based Phillips Petroleum and El Paso each picked up two.

Other US-based companies, Amerada Hess and Mobil-Exxon, operating through its Brazilian affiliate Esso do Brasil, also picked up blocks and participated in joint ventures.

Nineteen of the 53 blocks offered up for exploration failed to find bidders. These were mostly in deep water where exploration and production is costly and fraught with risk.

-- Anonymous, June 21, 2001


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