By Fabiana Frayssinet
RIO DE JANEIRO, Nov 27 2007 (IPS)

Foreign and national companies bid Tuesday for oil exploration rights in Brazil in an auction opposed by social movements, which are demanding the reinstatement of the state-run Petrobras’s monopoly over the country’s oil and natural gas reserves.

Members of Brazil’s Landless Movement (MST) and oil workers invaded the country’s petroleum agency, the ANP, in Rio de Janeiro to try to block the bidding, on the argument that domestic energy needs must be given top priority.

Meanwhile, investors showed up despite complaints over the decision announced early this month by the ANP to withdraw 41 offshore blocks from the auction. The 69 Brazilian and foreign firms that qualified to take part are bidding for oil and gas leases on 271 parcels.

The ANP announcement was made just after Petrobras reported on Nov. 8 its biggest find yet, in the Tupí oilfield in the Santos basin off the coast of southeastern Brazil, which could increase the country’s proven reserves by nearly 50 percent.

Presidential chief of staff Dilma Rousseff said the five to eight billion barrels found in the Tupí field could make Brazil one of the world’s biggest oil producers.

Rousseff said the decision to withdraw the most promising parts of the Tupí field and surrounding areas from the auction was aimed at “preserving national sovereignty.”

The withdrawal of 41 blocks from this week’s bidding annoyed participating investors, said Joao Carlos de Luca, the head of the Spanish-Argentine Repsol-YPF oil company in Brazil and the president of the Brazilian Petroleum Institute (IBP), who argued that the move generated a sense of “uncertainty” for those taking part in the opening up of the industry.

That view is shared by Rafael Schechtman of the Brazilian Infrastructure Centre (CBIE), who told IPS that the decision to withdraw the 41 blocks, the “filet mignon” of the auction, was “a bucket of cold water for investors…who lost time and money in investigating those areas.”

The expert said that although the decision was a legal one, the ANP will have to repay the money that the companies invested in exploration in those areas, and the measure “is a signal that the model in which all companies competed in equal conditions for concessions no longer stands.”

“The impression is that in the future it won’t be worth taking part in auctions that could be suspended” in favour of Petrobras, he argued.

Schechtman also said the decision “gives the impression that we are returning to a state monopoly.”

That is exactly what the MST, the oil workers’ union (FUP) and social movements are demanding.

In a statement issued several weeks ago to Brazilian President Luiz Inácio Lula da Silva, FUP, MST leader Joao Pedro Stedile, Governor Roberto Requiao of the southern state of Paraná and prominent leftists like architect Oscar Niemeyer urged that the auction be called off “to safeguard national sovereignty and guarantee that domestic supplies of oil and gas are given top priority.”

Last year, Petrobras announced that Brazil was in a position to meet all its domestic oil needs.

But FUP fears that granting concessions to private companies puts internal demand at risk.

In an interview with IPS, FUP coordinator Helio Seidel stressed that since Petrobras’s monopoly was struck down in 1997, more than half the blocks with oil producing potential have come under the control of foreign companies, which could force the government to import crude in the future.

Seidel pointed out that the current law stipulates that royalties of between five and 15 percent are to be paid for the concessions.

“We think this is too low, and that the government must modify the energy legislation, because in the future we’re going to have problems in terms of sovereignty with respect to this strategic product,” the trade unionist said.

Seidel pointed out that the contracts set no limit on the amount of oil that can be extracted. In the future, when oil is scarce, he said, Brazil’s supplies could dry up, and the foreign companies could be exporting from their fields while the country has no choice but to import oil.

“Under the present law, the government has next to no leverage to ensure that the wealth we own is transformed into social development for the country and for our national industry,” he said.

According to those who signed the statement, the situation is becoming critical because when the law was passed in 1997, a barrel of crude cost 30 dollars, and now it costs almost 90 dollars.

“The profit margin is huge under this concession regime, and we are going to see very little of all that wealth,” Seidel said.

According to the signatories of the statement, Brazilian oil reserves could guarantee self-sufficiency for the next 30 years, but only if they are managed strategically.

If multinational companies rush to exploit the reserves, “our sovereignty could be drastically reduced, and we may have to depend on imported oil once more.”

Opponents of the licensing concessions are also wary of alternative sources of energy from renewable sources, like biodiesel, which are backed by the Lula administration.

“Even taking into consideration the potential of biodiesel or ethanol (from sugarcane), in order to substitute all energy consumption with these, we would need two-and-a-half planet earths,” they said.

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