Brazil Outlines Scope of Planned Oil-Rights Sale

Brazil's petroleum regulator ANP said on Friday it expects to earn at least 978.8 million reais ($313.7 million) in bid fees when it offers oil and natural gas rights at an Oct 7 auction.

The 13th Round exploration and production concession-rights auction will put 266 offshore and onshore areas on the block in the first such sale in more than two years.

The sale will maintain strict local-content rules despite recommendations from the IBP, Brazil's oil industry association, to ease the requirements for the purchase of local goods and services. Many blame the rules for raising the cost of oil exploration and production in Brazil, but the ANP will keep the same criteria from the previous concession auction in May 2013.

"Clearly, the industry proposals were not listened to ... and in this we are very disappointed," said Jorge Camargo, President of the IBP. "When the regulatory and tax regime is more attractive, the bigger the volume of investments," he added.

The government, though, hopes to get as much as $2 billion in up-front fees, more than double the sum of minimum bid prices, Energy Minister Eduardo Braga said earlier this week. It could also get more than double that in minimum investment commitments from winners.

At its last concession auction two years ago, the ANP sold 142 areas to 39 companies in 12 countries for 2.82 billion reais. Winners of concessions own all oil produced in exchange for a royalty.

Getting such prices though, could be hard. World oil prices have fallen nearly 40 percent since the last auction and debt and cash problems at state-run oil company Petroleo Brasileiro SA may limit the company's interest. Petrobras, as the company is known, has always been the biggest bidder and winner at Brazilian oil-rights auctions but continues to be rocked by a massive corruption scandal.

The October sale will also lack access to some of Brazil's most promising areas. It will not include any of the offshore areas in the Campos and Santos Basins that are part of the Subsalt Polygon. The Polygon is home to a string of giant discoveries trapped far beneath the seabed by a layer of salt.

($1 = 3.12 reais) 

(Reporting by Jeb Blount, Marta Nogueira and Stephen Eisenhammer; Editing by Andrew Hay and Diane Craft)