For the first time Brazil opens its deepwater pre-salt fields to foreign energy companies

As a result of these reforms, executives from the majority of the world’s biggest oil companies have landed in Rio de Janeiro, to outbid each other for a slice of Brazilian crude whose quality is said to be world class and availability plentiful.

On Friday, many top executives from the world’s biggest oil companies are set to meet in Rio de Janeiro, Brazil, for the bidding round as the country readies to auction eight blocks from its coveted deepwater oil region.

Brazillean officials expect to see an aggressive bidding round for the 12 billion plus barrels of oil reserves that are on offer.

“It’s going to be competitive,” said Bernard Looney, of BP on the sidelines of an industry conference in Rio.

The blocks are located in a region with prolific oil production from fields that are known as pre-salt, i.e. where crude oil and gas sit beneath thousands of feet of salt under the deep Atlantic waters off eastern Brazilian shores.

This will be the first time that foreign energy firms will be offered the rights to operate pre-salt fields as part of President Michel Temer’s government reforms to make the energy sector more attractive to oil majors.

The improved terms as well as the quality of the reserves have made Brazil a lucrative target for big oil companies, despite their reduced appetite for capital-intensive mega projects since the crash of crude oil prices in 2014.

“It’s great for Brazil that the oil majors are here,” said Wael Sawan, Executive Vice President for Shell’s deepwater division while describing Brazil’s oil reserves as among the best in the world.

He went on to add, shell will participate in the auction and is confident it can pump from the pre-salt fields at below $40 a barrel.

As per oil industry sources, Exxon Mobil is also expected to bid.

Exxon declined to comment on Thursday on its strategy for the bid round.

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