Brazil is auctioning drilling rights to four deep-sea oil fields Wednesday, which it hopes will raise more than $26 billion and turn the country into one of the world’s top producers.
A dozen international oil majors are bidding for the blocks that are estimated to contain as much as 15 billion barrels of oil – nearly double the size of Norway’s reserves.
The so-called pre-salt deposits are trapped beneath the ocean floor off Brazil’s southeast coast.
“It’s a historic day for Brazil’s oil sector,” said Decio Oddone, head of the National Petroleum Agency, as the sale in Rio de Janeiro got under way.
The highly-anticipated auction – Brazil’s biggest ever – comes after far-right President Jair Bolsonaro‘s recent push in Saudi Arabia for the Latin American country to be included in the OPEC oil producing cartel.
The government hopes the sale could turn the country into the world’s fifth-largest producer in the next 10 years.
It ranked ninth in 2018, according to the U.S. Energy Information Administration.
Brazil’s state-owned oil giant Petrobras is among the bidders that also include ExxonMobil, Shell, and China’s CNOOC.
Bolsonaro’s move to auction off the fields to foreign companies is a diversion from prior left-wing administrations which enforced requirements that Petrobras be the sole operator of the country’s oil reserves.
The state oil company’s revenue was an integral source of funding for social programs championed by former leftist president Luiz Inacio Lula da Silva that lifted millions out of poverty in what the World Bank described as the “golden decade” of Brazil.
The rollback of requirements giving Petrobras special rights to oil reserves was initiated under Bolsonaro’s predecessor Michel Temer, the industry-friendly president that came to power after the controversial impeachment of Workers’ Party (PT) president Dilma Rousseff.
Multinational oil giants watched the 2018 presidential election closely, as it pitted Bolsonaro against PT candidate Fernando Haddad, who had vowed to “recover the pre-salt to serve the future of the Brazilian people, not the interests of international companies.”
Lula was initially the frontrunner in the election but was barred from running and ultimately jailed on highly contested corruption charges that many believe were politically motivated.
Unlike previous oil field sales, the areas up for grabs have already been explored by Petrobras, reducing the risk for buyers.
Prices are fixed and the winners will be companies offering the largest cut of oil to the government.
Petrobras has said it plans to exercise its remaining preferential rights for two of the four blocks, though it is expected to partner with foreign explorers.
If the rights to the four areas are sold, it will raise 106 billion reais, or more than $26 billion.
Environmental activists held a protest outside the luxury hotel in Rio where the auction was being held.
The sale comes as Brazil battles to contain a massive oil spill off its northeast coast, which has affected hundreds of beaches.
The Globe Post’s Bryan Bowman contributed to this report.