BP and Total Win Oil Exploration Rights in Brazil’s Amazon Basin

Two of Europe’s biggest oil companies, UK-based BP Plc (LON:BP, NYSE:BP) and France’s Total SA (EPA:FP, NYSE:TOT), have won exploration rights in Brazil’s Amazon basin. On Tuesday, 14 May 2013, Bloomberg reported that Brazil’s first oil auction in five years had attracted a record number of bids. Total’s share price closed marginally up in New York on May 14, as did BP’s share price.

**BP and Total Win Amazon Basin Oil Exploration Rights**
Brazil’s oil regulator, the National Petroleum Agency, has granted Paris-based Total exploration access to operate five blocks at the Foz do Amazonas basin in northern Brazil together with partners BP and Brazil’s state-backed energy giant Petroleo Brasileiro SA (NYSE:BRP), also known as Petrobras. BP has won an additional licence to operate a block at the same basin in partnership with Petrobras.

Australia-based BHP Billiton (LON:BLT, ASX:BHP, NYSE:BHP) has won bidding for two blocks. Oil company OGX Petroleo & Gas Participacoes SA, controlled by billionaire Eike Batista, Colombia’s Ecopetrol SA (NYSE:EC, TSE:ECP) and Queiroz Galvao Oleo & Gas SA also won operating licences for blocks at the Foz do Amazonas basin.
“So far we are satisfied and happy,” Guillermo Quintero, CEO of BP’s Brazil unit said on Tuesday, as quoted by Bloomberg. The two European oil majors would pay 621.5 million reais (£202.3 million) for the concessions.

Total’s share price closed 0.24 percent higher on the NYSE on May 14, while BP’s share price ended 0.21 percent up. In Paris on May 15, Total’s share price was less than one percent down, whereas BP’s share price was marginally up in London.
**Auction Beats Government Expectations**
Bloomberg quoted Brazil’s minister for mines and energy Edison Lobao as saying that the results of the auction had surpassed the government’s expectations. According to Magda Chambriard, the Foz do Amazonas basin had attracted the most interest from participants.

In its first oil exploration auction since 2008, Brazil offered 289 blocks holding an estimated 36.7 billion barrels of oil equivalent. With the state company Petrobras holding back full participation in the auction on account of its debt position, foreign companies are seen as benefitting from the country’s oil resources.
Bloomberg quoted T.J. Conway, a research and advisory manager at New York-based Energy Intelligence Group, as commenting that both the Foz do Amazonas and the Barreirinhas blocks demonstrated the level of interest in the licensing round. “The industry is now pursuing multiple Atlantic Margin plays, applying the conjugate basins approach.”

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Brazil is also scheduled to offer blocks off its north-eastern coast, with oil companies looking forward to exploring the fields given their similarities to the 840 million-barrel Zaedyus field across French Guiana’s border in Brazil.
**Total’s share price was 0.45 percent lower at €38.80 in Paris as of 14:20 CEST on 15 May 2013. BP’s share price was 0.21 percent lower at 467.55p in London. Total’s share price was 1.50 percent down at $49.85 in pre-market trading on the NYSE, whereas BP’s share price was 0.56 percent down at $42.87.**

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Tsveta van Son
Tsveta van Son is part of Invezz’s journalist team. She has a BA degree in European Studies and a MA degree in Nordic Studies from Sofia University and has also attended the University of Iceland. While she covers a variety of investment news, she is particularly interested in developments in the field of renewable energy.

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