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Protesters Clash with Police as Petrobras-led Consortium Wins Production Rights

  • VOA News

Police clashed with protesters on the streets of Rio de Janeiro as the Brazilian government announced the winner of an auction to develop an offshore oilfield that could hold up to 12 billion barrels.

The sole bid came from a consortium that includes Shell, Total, two Chinese firms and Brazil's state-run petroleum company, Petrobras.

Petrobras took 40 percent of the field, 10 percent above the legal minimum, while France's Total SA and Anglo-Dutch Royal Dutch Shell will each have 20 percent of the partnership. China National Petroleum Corp and China's CNOOC will take 10 percent each.

Highlighting the lackluster interest from most major oil companies in Monday's auction, the companies agreed to give the government the minimum legal amount of so-called “profit oil” from the fields - oil produced after initial investment costs are paid. Under the terms of a new production-sharing contract, that minimum was set at 41.65 percent of profit oil.

Though hailed by the government as the start of development for its largest-ever oil discovery, the sole bid reaffirmed the fact that most multinational oil companies were turned off by the auction.

Director of Brazil's National Petroleum Agency, Magda Chambriard said that the companies that are part of the winning group will bring the success to the project that the Brazilian people desire.

“We have absolute certainty that Libra will be developed in the most correct way possible in support of Brazilian society,” Chambriard said.

Despite the huge potential of the offshore region, many foreign oil producers and other potential investors shied away because they believed the rules for the new concessions offered little upside for profit and too big a role for the government and Petrobras.

Edison Lobao, energy and mining minister for Brazil, said that everyone involved in the auction sees the true potential.

“You only show up to an auction of this nature, if you are one of those that actually believes in the greater possibilities, the quantities of petroleum shown here, and in total success moving forward,” Lobao said.

Hundreds of protesters calling for the nationalization of Brazil's oil industry clashed with police outside the hotel where bidding took place.

Monday's protest was called by striking oil workers, whose union has long opposed any foreign involvement in Brazil's petroleum production.

Security officials used tear gas and rubber bullets to try to disperse the protesters.

Some information for this report was contributed by Reuters.
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