Brazil's giant Libra pre-salt oil discovery: Shell, Petrobras, Total, CNPC, CNOOC won Sharing Contract.

A consortium of companies, including Royal Dutch Shell plc (“Shell”), Petrobras, Total, CNPC and CNOOC, won today a 35-year production sharing contract to develop the giant Libra pre-salt oil discovery located in the Santos Basin, offshore Brazil. The Brazilian regulator, Agência Nacional do Petróleo (ANP), estimates Libra’s recoverable resources of between 8 to 12 billion barrels of oil.

“The Libra oil discovery in Brazil is one of the largest deep water oil accumulations in the world. We look forward to applying Shell’s global deep water experience and technology, to support the profitable development of this exciting opportunity,” said Peter Voser, Chief Executive Officer, Royal Dutch Shell.

Shell holds 20% in the consortium, with Petrobras 40% as operator, Total 20%, CNPC 10% and CNOOC 10%. The consortium will work together in an integrated fashion to support Petrobras, the most experienced operator in the Brazilian pre-salt, and will incorporate each company’s deep water skills, people and technology for the success of the venture.

“Libra offers a unique opportunity to participate in the development of a super-giant deep-offshore oil discovery with strategic partners. Reinforcing our position in the pre-salt Santos basin strengthens and diversifies our upstream portfolio and fits with our strategy to sustain post-2017 production over the next decade. We look forward to participating in the development of these vast resources, and we are confident that the combined deep-offshore expertise represented within the consortium will be a valuable contribution to the growth of Brazil’s oil and gas production”, said Christophe de Margerie, Chairman and Chief Executive Officer of Total.

The production sharing contract is expected to be signed in November 2013. As part of the winning bid, Shell will pay its 20-percent share of the total signing bonus of USD $1.4 billion [3.0 billion reais], and fulfill the minimum work program no later than end 2017.

The ultra-deep water Libra accumulation is located in Santos Basin, approximately 170 kilometers (105 miles) off the coast of Rio de Janeiro. The block covers approximately 1,550 square kilometers in water depths of around 2,000 meters (6,500 feet). The reservoir depth is around 3,500 meters below the sea floor (11,500 feet). The ANP estimates that total gross peak oil production could reach 1.4 million barrels per day. Further appraisal is required to firm up this estimate, the development concept and a first oil date.

Brazil: massive oil discovery on offshore Sergipe

Brazil's government will announce a massive oil discovery off the country's northeast coast later this month, according to acting Sergipe state Gov. Jackson Barreto.

Mines and Energy Minister Edison Lobao will travel to Sergipe's capital, Aracaju, on Oct. 23 to officially announce "the world's largest oil discovery of 2013," Mr. Barreto told Sergipe state's official news agency Friday. The event is also expected to include Magda Chambriard, director of the country's National Petroleum Agency, or ANP, Mr. Barreto said.

The two government agencies, however, downplayed prospects for an announcement. The Mines and Energy Ministry could not confirm Mr. Lobao's visit. In a statement, the ministry added that it "has no knowledge of any new oil discovery in the country other than those already announced by Petrobras."

The ANP, meanwhile, said that Ms. Chambriard would visit Sergipe on Oct. 23 to discuss the upcoming 12th-round auction of oil and natural gas exploration blocks. Ms. Chambriard's visit, though, was not related to any impending announcement of a major oil discovery, a spokeswoman said.

Last week, Brazilian state-run oil company Petroleo Brasileiro (PBR, PETR4.BR), or Petrobras, confirmed it had made a "relevant" discovery off Sergipe's coast that would start production of 100,000 barrels a day in 2018, Chief Executive Maria das Gracas Foster said. The executive declined to give any volume estimates for the oil fields.

Petrobras first announced a series of discoveries in late 2012, saying the finds had opened a "new oil frontier" in the country. The discoveries are closer to shore and could be much cheaper to develop than larger oil fields, known as the presalt, found buried under a thick layer of salt deep under water off Brazil's southeast coast. Billions of barrels of crude have been discovered in the region, and the government plans to auction off a field there known as Libra under new production-sharing agreements later this month. Libra is estimated to hold recoverable reserves of between 8 billion and 12 billion barrels of oil.

The Sergipe discoveries have geologists rethinking their models of the area, where the unexplored shallow-water areas of what's known as the Sergipe-Alagoas Basin were thought to hold between 500 million and 1.5 billion barrels of recoverable reserves. Petrobras's discoveries were made in water 2,500 meters deep.

Petrobras operates the exploration blocks containing the new discoveries with a 60% stake. The remaining 40% stake belongs to IBV-Brasil, a joint venture between Indian companies Bharat Petroleum Corp. (500547.BY) and Videocon Industries Ltd. (511389.BY).