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Brazil reclaiming oil exploration blocks awarded in 2006

Sept. 2, 2011 at 4:24 PM   |   Comments

BRASILIA, Brazil, Sept. 2 (UPI) -- Brazilian Energy Minister Edison Lobao said the government intends to reclaim promising oil exploration blocks awarded in 2006.

The exploration rights were won by international energy companies in an auction five years ago but never formally leased to the winners.

Lobao told reporters, "Brazil rigorously honors its contracts, but there was no contract of any kind signed in relation to the eighth round, which the National Energy Policy Council decided not to carry on further," MercoPress news agency reported Friday.

The oil concessions in question are offshore of Rio de Janeiro and Sao Paulo states. The blocks returning to government control are in Brazil's offshore southern Atlantic Santos Basin, which includes the Tupi field, renamed Lula, and Cernambi, with the two sites estimated to contain 8.3 billion barrels of oil and natural gas.

Prompting the government's reconsideration was the fact that the winning bids were made only months before Petrobras' 2007 announcement of the offshore Tupi prospect, then the largest oil discovery in the Americas in 20 years.

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