By Jeb Blount and Carla Simoes

May 15 (Bloomberg) — Brazil won’t auction new oil properties until at least 2009 because there is a lack of equipment necessary to expand exploration, Mines and Energy Minister Edison Lobao said.

Oil companies need to start work on the leases they already have before Brazil can contemplate its planned Round 10 auction or revive its stalled Round 8 auction, Lobao said today in an interview in Brasilia. State-controlled Petroleo Brasileiro SA, or Petrobras, has seen timetables broken by platform shortages.

To try and reduce delays, Petrobras has leased about 80 percent of the world’s deep-water drilling rigs and plans to build 146 offshore service ships in Brazil by 2015. A ship shortage has delayed efforts by Petrobras, Galp Energy SGPS SA and BG Plc to explore the 5 billion- to 8 billion-barrel Tupi field, the Western Hemisphere’s biggest oil find in three decades.

“We’ve already auctioned off a lot of blocks,” Lobao said in an interview with Bloomberg Television. “There simply aren’t enough seismic ships and other equipment for Petrobras and other companies to explore what they have.”

Brazil, is not delaying the auctions to restrict foreign companies from entering the Brazilian exploration market, Lobao said.

“We are not going to change any existing contracts and foreign companies are going to remain welcome,” he said. “We are not looking at any overhaul of legislation.”

Rule Changes

The government may change some rules on royalties and taxes in the wake of record oil prices.

“Our changes will be focused on better sharing some of the new oil wealth between the companies and the government,” he said.

Brazil can withstand a delay in auctions in part because companies are finding more oil than originally expected, particularly in blocks near Tupi, he said. Higher-than-expected reserve generation and undeveloped leases ensure that output won’t fall as auctions are delayed, he said.

Petrobras has drilled halfway through the offshore Carioca deposit and needs more time to determine its size, Lobao said. Haroldo Lima, head of Brazil’s oil regulator, said last month that Carioca may contain as much as 33 billion barrels. Petrobras declined to comment on the size of the field.

Carioca as well as Tupi are part Brazil’s pre-salt region, a district beneath as much as 2,000 meters (6,500 feet) of water and as much as 4,000 meters of seabed. Another pre-salt field, Jupiter, may contain Tupi-sized quantities of oil and gas, Lobao said.

Only 15 wells have been drilled in the pre-salt region by Petrobras and rivals such as Irving, Texas-based Exxon Mobil Corp., Royal Dutch Shell Plc and Spain’s Repsol YPF SA, Lobao said.

To contact the reporters on this story: Jeb Blount in Rio de Janeiro at jblount [Email address: jblount #AT# bloomberg.net - replace #AT# with @ ]; Carla Simoes in Brasilia at csimoes1 [Email address: csimoes1 #AT# bloomberg.net - replace #AT# with @ ].

Tags: peak oil energy investments

This entry was posted on Thursday, May 15th, 2008 at 8:13 pm and is filed under Brazil, Economic Strains of Peak Oil, PetroBras (PBR), Shipping Companies, drilling/service companies, oil supply. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.