Brazil Eighth Round: Campos, Casualty of Energy Security Strategy

For the eighth Brazilian round on November 28-29, 2006, the government has surprised the market by its unexpected decision to significantly reduce the area offered compared with the two previous auctions and also to exclude the Campos Basin.

* This decision is probably motivated by domestic and international political pressures; it also favors Petrobras, the state-controlled oil company. Thus assured of overwhelming domestic predominance by this decision, the company can focus its efforts on international expansion.
* Such a retreat for the country's exploration and production sector, however, might displease potential international investors seeking to acquire or expand their acreage in the most prolific Brazilian oil region, the Campos Basin.

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