UPDATE 1-Brazil kicks off first oil, gas auction in five years

Tue May 14, 2013 10:14am EDT
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* Comes as govt intervention mounts, global supply seen up

* Petrobras, Galp, OGX win blocks in early bidding

* Areas on offer believed to hold 35 bln barrels of oil

By Jeb Blount and Sabrina Lorenzi

RIO DE JANEIRO, May 14 (Reuters) - Brazil on Tuesday kicked off its first auction for oil and natural gas rights in five years, gauging whether government intervention and growth in new global supplies have crimped the interest that followed discoveries of huge offshore reserves in 2007.

The two-day auction by Brazil's national oil regulator began with the sale of onshore blocks in the northeastern Paranaiba basin.

Bids from state-run energy company Petroleo Brasileiro SA , Portugal's Galp Energia SGPS SA and OGX Petroleo e Gas SA, the oil startup controlled by Brazilian billionaire Eike Batista, won early blocks there.

On offer are rights to 289 onshore and offshore exploration and production blocks that add up to an area roughly the size of Bangladesh. The blocks, in regions outside the offshore swath near Rio de Janeiro where the big recent reserves were discovered, are estimated to contain at least 35 billion barrels of oil, or just over a year's worth of global crude oil demand.

Though a record number of participants signed up to take part in the auction, government officials, industry suppliers and others are watching the sale closely to determine how much the 64 Brazilian and international companies registered are willing to bet on Brazilian oil and gas.   Continued...