Brazil kicks off controversial gas auction

Brazil began auctioning off 240 onshore blocks for gas exploration in a dozen states on Thursday amid complaints from environmentalists about a lack of regulation. Taking part in the two-day sale are 10 Brazilian companies and a slew of foreign contenders, national petroleum agency ANP said. The international bidders include France's GDF and Total, El Paso from the United States, Canada's Gran Tierra, Spain's Repsol, Germany's RWE, Anglo-Dutch Shell, Portugal's Petrogal, Colombia's Petrominerales, Panama's Trayectoria Oil and Gas an Geopark from Bermuda. The licensing round involves blocks covering 168,348 square kilometers in the states of Amazonas, Acre, Tocantins, Alagoas, Sergipe, Piaui, Mato Grosso, Goias, Bahia, Maranhao, Parana and Sao Paulo. Some 110 blocks are in remote regions, such as the northern state of Acre, which pose technological challenges for producers. The sale marks the third round of energy auctions this year in Brazil, which in 2007 discovered huge so-called pre-salt oil reserves deep below the Atlantic Ocean. Buried beneath several kilometers of ocean, bedrock and hot salt beds, the total reserves could hold more than 100 billion barrels of high-quality recoverable crude and could turn Brazil into one of the world's top exporters. The auction is seen as controversial because it involves shale gas drilling, which has the potential to contaminate surface or groundwater and cause air pollution. "Drilling with hydraulic fracturing techniques raises a major controversy in all countries over the huge environmental impacts and led some European countries like France to ban it," the SocioAmbiental Institute noted at a recent public hearing. But ANP chief Magda Chambriard stressed that Brazil was working on regulations to ensure that such exploration would meet environmental standards.