China's top three oil and gas producers have signed up for bidding for a block of a deepwater oil field in Brazil, each.
Brazil will hold a bidding for a pre-salt block in the Libra oil field and the first round is scheduled to be held on October 21 this year. The ANP said recently that 11 oil and gas firms around the globe had signed up for the bidding and they included the top three Chinese oil and gas producers, including China National Petroleum Corp. (CNPC), China Petrochemical Corp. (Sinopec Group), and China National Offshore Oil Corp. (CNOOC Group).
Wan Xuezhi, a researcher at CIConsulting, said in an interview recently that it would be the first time for the top three Chinese oil and gas producers to bid for oil and gas assets overseas at one time. And in theory, there would be great possibility for them to get the exploration.
The Libra oil field block is the biggest one that is put up for bidding in the world in terms of reserves and in line with international certificate firms, the block is full of light-weight oil and the reserves is about eight billion to 12 billion barrels, accounting for 80 percent of the proved of Brazil.
Term of the drilling right is 35 years and the exploration period is four years. The minimum shared by the Brazilian government is 75 percent and the one that provides the maximum will win the bidding. Petrobras will be the sole operator and in the block, it will control a stake of at least 30 percent. In addition to the three Chinese firms, eight others including France-based Total and Japan-based Mitsui have signed up for the bidding, each.
Petrobras is said to be busy in coordinating with Sinopec Group in a bid to incorporate a consortium and the consortium may include other oil and gas firms including Norway-based Statoil. In addition, it is reportedly to raise stake in the block to 40 percent. And major contents of the agreement will include that Brazil will ensure the supply of crude oil to China while Sinopec Group will provide financing for it for the project.
Available information shows that among the top three Chinese oil and gas firms, only Sinopec and CNOOC have had oil and gas assets in Brazil. Wan reiterated that both the drilling cost and related operating risk would be high. However, the three took not only economic benefit into consideration when expanding in markets overseas.