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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: Douglas V. Fant who wrote (46380)	6/13/1999 5:06:00 PM
From: Broken_Clock	Read Replies (2) \| Respond to of 95453

Sunday June 13, 3:06 pm Eastern Time Oil titans descend on Brazil for historic sale By Tracey Ober RIO DE JANEIRO, June 13 (Reuters) - The world's oil titans descended on Brazil this weekend to take first crack at its long-protected oil reserves, being offered in an historic bidding round next week. Industry sources said more than 400 executives were arriving in Rio de Janeiro for Brazil's inaugural oil licensing auction, being billed as the most exciting event in the petroleum world this year. Latin America's biggest country, which had jealously guarded access to its vast untapped reserves for decades, is now opening its oil to outsiders with the June 15 and 16 sale of concession rights to 27 largely unexplored blocks. But unlike Venezuela's much-heralded ''oil opening'' in 1996 when companies hurled hundreds of millions of dollars in cash at just one block, the response has been much more tepid to Brazil's offer 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. The country's inexperience and relatively high risk territory -- Brazil sits on only 9 billion in proven reserves compared to the 64 billion that Venezuela had when it opened up -- also made the petroleum industry wary. ''The timing is not good for the Brazilians, but it is one of the hottest licensing rounds this year,'' said Matthew Shaw, Latin America specialist at oil consultants Wood Mackenzie in Scotland. ''There is nowhere else in the world I can think of that is going to attract as much interest.'' Brazil stunned the oil industry with the speed and scope of its about-face on petroleum when its infant regulatory body completely dismantled a 45-year monopoly by state Goliath Petrobras in just over a year. Analysts say companies will swallow the risks of this licensing round to get a foothold in the huge and freshly liberalised market. Brazil's strong industrial base and enormous population of 165 million create heavy energy demands that are growing at a galloping rate and cannot be met by the 1.2 million barrel equivalents per day that Petrobras currently pumps out. ''This ends the transition period. The game is going to start now,'' said Jean-Paul Prates, executive director of oil consultants Expetro in Rio de Janeiro. Most of those lining up for the historic bidding rounds, to be held June 15 and 16 at the coastal resort city's landmark five-star Sheraton Hotel, already have a stake in Brazil or have made it a cornerstone of their Latin American strategy. Royal Dutch/Shell (quote from Yahoo! UK & Ireland: SHEL.L), for instance, has been distributing gas in Brazil for more than 80 years and its local unit is one of the country's biggest companies. Shell is also one of the dozen or so mulitnationals negotiating partnership deals with Petrobras to explore and develop areas the state-controlled group still retains. But, like many of the oil majors looking at Brazil, the Anglo-Dutch company balks at the country's unfavorable tax regime and has trimmed its investment intentions here. Brazil's National Petroleum Agency (ANP) oil regulator lobbied hard to rejig rules in time for the bidding round, battling a threatened court suspension last week, but the tax picture remains murky. ''You can't just leave it to one week before the bid,'' Prates said. ''Many companies gave up because they did not have enough certainty before the event.'' Despite the risks, nearly 40 foreign and local companies signed up. Petrobras itself also ponied up, looking for the more favorable terms of the bidding round compared to the concession rights the state company originally got from the ANP. Shell and other heavyweights such as France's Elf , Anglo-American BP Amoco (quote from Yahoo! UK & Ireland: BPA.L), U.S.-based Texaco (NYSE:TX - news), Mobil (NYSE:MOB - news), Chevron (NYSE:CHV - news) and Exxon (NYSE:XON - news) unit Esso are expected to vie for the most attractive oil blocks in the deepwater Campos Basin, where Brazil produces most of its oil and holds the bulk of its reserves. Other companies will be sniffing around for a good natural gas strike, perhaps in the Amazon basin near recent finds. The ANP plans more licensing rounds in the future, but hopes to draw in most of the majors next week. ''Whoever doesn't invest today will lose market share for 10 to 15 years from now,'' ANP chief David Zylbersztajn warned last week. biz.yahoo.com