International Finance
Oil & Gas

Brazil oil auction fails to achieve the $26 billion target

Brazil oil auction
Petrobras acquired 90% of the Buzios oil field, China’s CNOOC and CNODC acquired the other 10%

Brazil’s much-anticipated oil auction for drilling rights to four deep-water oil fields did not go as planned as it raised only $17 billion, well short of the estimated $26 billion the Brazilian authorities expected to raise.

Brazil’s state-owned Petrobras acquired 90 percent of the Buzios oil fields, which is the largest among the four up for auction. The remaining 10 percent was acquired by Chinese firms CNOOC and CNODC.

The second oil field -Itapu, only received an offer from Petrobras, whereas, the other two oil fields namely – Sepia and Atapu, did not receive any offer at all. The two blocks are expected to be auctioned again next year.

Despite the oil auction being a disappointment and not attracting foreign investment as it was earlier anticipated, Decio Oddone, head of the National Petroleum Agency in Brazil termed the auction as a success and described the sale as the biggest ever achieved in the world.

The Brazil Oil Institute, in a statement, said, “The fact that two blocks were not auctioned does not reduce the importance of the result of this event. This is the first auction of its kind offering large volumes already discovered, which reduces risk.”

Prior to the auction, around a dozen major oil firms around the world were expected to bid for the oil fields in Brazil which contain as much as 15 billion barrels of oil. Some notable names that were expected to bid are ExxonMobil, BP, Total and Royal Dutch Shell.

According to reports, a hefty signing fee demanded by authorities in Brazil might be the reason why many oil giants chose not to bid for the oil blocks.

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