Brazil auctions valuable pre-salt fields in aftermath of Petrobras scandal

The National Agency for Petroleum, Natural Gas, and Biofuels (ANP) holds two auctions for its valuable pre-salt fields, continuing the scandal-driven rush to divest by Brazil’s state-owned energy giant, Petrobras.

These vast hydrocarbon formations, trapped under thick layers of salt beneath the ocean floor, were considered among the world’s most important oil discoveries last decade and remain Brazil’s most prized energy assets, according to regional publication AS/COA. Pre-salt fields are licensed under a distinct contract structure, and this will be only the second and third time that they will be put to public bid.

The divestment follows auction rounds in May and September in 2017, and precedes new rounds in 2018 and 2019.

Brasilia is positioning energy as a key industry to mend the country’s finances, a need hastened by the so-called Car Wash Scandal. Petrobras has been rocked by allegations that former directors conspired with contractors and politicians to extract the equivalent of some US $2 billion from the company in kickbacks and illicit political donations over the past decade, according to Britain’s Financial Times.

Time Magazine reports that no fewer than 20 different political parties have had members implicated in the scandal. More than 200 people have been charged with crimes, and two former Brazilian presidents, the heads of both houses of Brazil’s congress, more than 90 lawmakers and one third of President Michel Temer’s cabinet are implicated.

More broadly, according to the Americas Society in May 2017, Brasilia is positioning energy as a key industry to reignite Brazil’s lackluster economy.