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By Marianna Parraga, Gram Slattery and also Marta Nogueira RIO DE JANEIRO, Nov 7 (Reuters)– Major worldwide oil companies snubbed a 2nd Brazilian oil public auction straight on Thursday, missing appealing overseas blocks and also compeling authorities to reevaluate a bidding process system that provides a blessed placement to state-run Petroleo Brasileiro SA.

The just obstruct granted in Thursday’s bidding process mosted likely to the Brazilian oil company, referred to as Petrobras, and also Chinese state company CNODC, a device of China National Petroleum Corp, that provided the minimal quote. Four various other blocks got no proposals.

The frustrating outcome, complying with an absence of international passion in an also larger Wednesday round, was a wake-up phone call to those that anticipated today to crown Brazil as uncontested champ of the Latin American oil sector.

Analysts have actually concurred in current days that appealing oil leads in Brazil’s pre-salt location, where billions of barrels of oil are caught under a layer of salt below the sea flooring, are obtaining expensive also for oil majors with solid passion.

The deepwater obstructs likewise need substantial long-lasting financial investments compared to options such as shale areas.

“All majors are focused on capital discipline and value versus volume. They will not bid at any cost for pre-salt assets,” claimed Marcelo de Assis, head of Latin America upstream for working as a consultant IHS.

Brazil’s brand-new conservative federal government vowed market-friendly reforms and also has actually functioned to downsize the function of Petrobras in the power sector to ensure that much better capitalized companies can touch its large books.

After the weak public auctions, authorities recommended they required to do much more, specifically ditching the right of very first rejection that Petrobras needs to run any kind of areas in the supposed “pre-salt polygon.”

Decio Oddone, the head of Brazilian oil regulatory authority ANP, claimed those unique legal rights prevented some competitors, including that he was amazed at the outcomes, as he anticipated at the very least 3 blocks to be granted.

Petrobras itself fell short to send proposals for 2 blocks where it had actually at first exercised its advantageous legal rights.

Its just quote on Thursday was a minimal deal for the Aram block, with a finalizing reward of 5 billion reais ($ 1.2 billion), in addition to China National Oil and also Gas Exploration and also Development Corp (CNODC), which took a 20% risk.

Brazilian Mines and also Energy Minister Bento Albuquerque claimed “it does not seem to make sense” for Brazil to preserve the unique Petrobras legal rights solely in the location. He claimed the federal government has to find out a lesson from the public auctions to improve cause the future.

“We understand from what the companies tell us that our areas continue to be very attractive and productive,” the priest claimed. Other authorities supported the view, indicating solid international need in previous pre-salt rounds considering that 2017.

Brazil likewise fell short on Wednesday to honor 2 of 4 blocks in the country’s most enthusiastic oil round ever before, as high finalizing costs and also the supremacy of Petrobras in the “transfer-of-rights” (TOR) location frightened oil majors.

“Brazil is competing with opportunities everywhere in the world,” claimed Assis, of IHS. “Brazil’s pre-salt assets are attractive, but up to a price.”

($ 1 = 4.0836 reais) (Reporting by Gram Slattery, Marianna Parraga and also Marta Nogueira Additional coverage by Rodrigo Viga Gaier and also Roberto Samora Editing by Brad Haynes, Marguerita Choy and also Bernadette Baum)

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