Oil Titans Descend on Brazil for Historic Sale

Brazil this week will auction sections of its oil reserves for exploration to foreign companies now that its 46-year state monopoly has been broken up. Most of the world’s largest oil companies, including Mobil, Texaco and Royal Dutch/Shell, are to bid for 27 potential oil and gas sites at a massive auction Tuesday and Wednesday. It is the first auction of its kind since state company Petrobras’ monopoly was abolished four years ago. Petrobras will participate and may form partnerships with foreign firms. Brazil’s National Oil Agency predicts that $15 billion to $20 billion will be invested in Brazil over five years following the auction. Brazil produces about two-thirds of the 1.8 million barrels of oil it consumes daily. But some analysts say that unlike Venezuela’s heralded “oil opening” in 1996, when companies hurled hundreds of millions of dollars at just one block, the response to Brazil’s offer has been much more tepid and it should draw less than $10 million total. Dismal world oil prices at budget time this year forced many companies to ditch new exploration plans and opt out of Brazil’s first round.