Brazil's Libra Oil Field Auction Will Have Two or Three Bids, Minister Says

By Bruno Lourenco and Paulo Trevisani

BRASILIA--Brazil's sale of one of the world's largest offshore oil discoveries will feature two or three groups of bidders, despite the absence of some major private-sector oil companies among the candidates, the country's energy minister said Friday.

"We are aiming at a successful auction on October 21 and we will have that," Energy Minister Edison Lobao told reporters. The government hasn't heard from U.S. oil giants Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX) about why they didn't register for the auction, Mr. Lobao said.

Brazil will sell off rights to develop the Libra field, which is estimated to hold between eight billion and 12 billion barrels of recoverable crude oil. Brazil's government plans to use royalties and its share of oil from the field to fund investments in health care and education.

"This will be one of the most important auctions ever in the oil industry," Mr. Lobao said.

The auction will be the first under new production-sharing rules, which give the government a greater say in development of the oil fields trapped thousands of meters under a thick layer of salt beneath the Atlantic Ocean. Brazilian state-run oil company Petroleo Brasileiro SA (PBR, PETR3.BR, PETR4.BR), or Petrobras, also will operate the field and hold a mandatory 30% stake.

Mr. Lobao said the government is not considering reducing Petrobras's obligation to hold a 30% stake in the field. "There is only the possibility that it will increase if the company wants to be part of a consortium," Mr. Lobao said.

Potential bidders for Libra include Royal Dutch Shell PLC (RDSA, RDSA.LN), France's Total SA (TOT, FP.FR) and Portugal's Galp Energia SGPS SA (GALP.LB), but the list is dominated by Asian state-run firms such China's CNOOC Ltd. (CEO, 0883.HK), China National Petroleum Corp. and China Petroleum & Chemical Corp. (SNP, 0386.HK, 6200028.SH), also known as Sinopec. Sinopec will participate via its joint venture with Spain's Repsol SA (REP.MC).

--Jeff Fick contributed to this article.

Write to Bruno Lourenco and Paulo Trevisani at [e-mail]

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