October 27, 2017 / 10:03 AM / in a year

UPDATE 1-Brazil confident of oil auction, appeals injunction

(Adds minister’s comment, background)

By Rodrigo Viga Gaier

RIO DE JANEIRO, Oct 27 (Reuters) - Brazil’s government has appealed an injunction suspending a pre-salt oil auction and expects the bidding to go ahead as planned on Friday, the Mining and Energy minister Fernando Coelho Filho told Reuters.

A federal judge in the Brazilian state of Amazonas issued an injunction sought by the leftist Workers Party late on Thursday, ordering the suspension of the billion-dollar auctions of pre-salt oil and gas rights.

Major oil companies are vying for the blocks in Brazil’s offshore pre-salt area, where billions of barrels of oil are trapped under a layer of salt. The Workers Party opposes the privatization of oil production and a reduced role for state-run oil company Petroleo Brasileiro SA.

“We believe the suspension will not remain in place. We will see a great auction,” Coelho Filho said.

The auctions were due to start in Rio de Janeiro at 9 a.m. (1100 GMT) on Friday.

Top global oil companies are lined up to bid in the auctions for some of the world’s most prolific deepwater oilfields, a test of their appetite for capital-intensive offshore projects after three years of low oil prices.

Firms such as Exxon Mobil, Royal Dutch Shell and Total are expected to be compete for the more than 12 billion barrels of estimated oil reserves that Brazil is offering. At current prices, that volume of oil is worth about $600 billion.

Several of the blocks were expected to go to companies that are already developing nearby blocks, such as Shell, Norway’s Statoil and Petrobras. (Reporting by Rodrigo Viga Gaier. Writing by Silvio Cascione. Editing by Jane Merriman)

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