Prospective bidders for the rights to develop Brazil’s largest oil field could face paying out more than £4.6billion this October.
The auction for rights to develop the Libra field will require the winner to pay at least 15billion reais as an upfront payment, with profit oil after the initial output is credited against exploration costs being split between the Brazilian government and investors.
The winner of the auction will be required to give at least 40% of the output after expenses to Brazilian authorities, with minimum requirements of the amount of local goods and services to be used during explortion and development.
Brazil’s energy planning council has started to release details of the auction in the country’s official government publication.
However, the restrictions may prove a barrier to development, not least as other companies have already reported problems with their Brazilian operations. Subsea 7 admitted their losses in the country had been ‘unacceptable’ after supply and weather delays.
Shell said they would wait for more details to be released this month before deciding whether to bid for Libra.
“We are awaiting the draft definition of the contract that will be even placed in public hearing,” Andre Araujo, the company’s president in Brazil, said.
The subsalt field is expected to produce more than 1million barrels of oil per day, with 12 billion barrels of recoverable oil.