From: Associated Press
Published November 29, 2006 12:00 AM

Judge Suspends Government Auction of Oil Concessions

RIO DE JANEIRO, Brazil — A federal judge in Brasilia suspended an annual government auction at which Italian, Norwegian, Spanish and Argentine companies had won oil exploration and production concessions.

Brazil's National Petroleum Agency, or ANP, immediately appealed the decision and said it was optimistic the auction would resume Wednesday as scheduled. The court objected to ANP rules that limit the number of offers one bidder can make.

Federal congresswoman Clair da Flora Martins said the limit was "clearly designed to hamper Petrobras," as Brazil's state-controlled oil company Petroleo Brasileiro SA is known.

"Even if (Petrobras) wants to compete, even if it bids more than the others, its dispute is restricted by this absurd limit imposed by the ANP," Martins told the Web site of the newspaper Folha de S. Paulo

On Tuesday, foreign oil companies increased their participation in Brazil's largely nationalized oil industry and offered to pay generously for Brazilian offshore oil and gas blocks in very deep waters, hoping to hit light crude in what could be a promising new oil province.

Italian oil company Eni SPA placed the winning bid of 307 million Brazilian reals ($140 million) for rights to drill in a new deep-water frontier area in the Santos Basin off Sao Paulo's coast.

Norway's Norsk Hydro ASA won a block in the same area with a 7 million real ($3.3 million) bid. The company also had a stake in two more winning bids for blocks with Spanish-Argentine Repsol-YPF and Brazil's national oil company Petrobras as lead operators.

And the Indian company ONGC Videsh, an overseas exploration unit of India's Oil and Natural Gas Corp., participating for the first time in a Brazilian oil auction, won a bid for another block in the new frontier area, with an offer of 1.5 million reals ($691,000).

The two-day annual oil and gas exploration and production auction, which ends Wednesday, has Brazil's National Petroleum Agency offering 284 areas totaling 101,600 square kilometers (39,227 square miles) in 14 areas, including 12 offshore sites.

Petrobras had a monopoly on the exploration and production of Brazilian oil for 40 years, but Congress broke the monopoly in 1996. Despite the breakup, foreign firms produce only a tiny part of Brazil's total oil output of about 1.8 million barrels a day, but their output is expected to rise to some 330,000 barrels a day by the end of the decade.

Source: Associated Press

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