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Rio deploys troops, navy ships ahead of hotly contested oil field auction

Published time: October 21, 2013 08:24
Edited time: October 21, 2013 14:11
Brazilian soldiers stand guard in front of the hotel where Brazil's National Petroleum Agency (ANP) will auction drilling rights to one of the world's largest offshore oil discoveries in Barra de Tijuca, Rio de Janeiro, Brazil on October 20, 2013. (AFP Photo/Chrostophe SImon)

Brazilian soldiers stand guard in front of the hotel where Brazil's National Petroleum Agency (ANP) will auction drilling rights to one of the world's largest offshore oil discoveries in Barra de Tijuca, Rio de Janeiro, Brazil on October 20, 2013. (AFP Photo/Chrostophe SImon)

Tear gas has been fired south of Rio as protesters clash with soldiers deployed to guard a crucial Brazilian oil field auction. Over 1000 troops have been deployed in Rio de Janeiro ahead of the auction.

The move to partially sell off Brazil’s most promising oil reserves has been met with opposition, triggering mass strikes and disruption to oil production.

A spokesperson from the Brazilian army said that around 1,100 troops are being deployed around the Hotel Windsor in West Rio where the auction will be staged. Two naval ships will also be anchored in front of the hotel. Officers will be equipped with non-lethal weapons and riot armor.

“Intelligence officers and security cameras will be monitoring the areas around the hotel to warn of possible protest, guaranteeing the security of the public,” a spokesperson told Brazilian newspaper O Globo.

Security sources told the news website G1 that the area around the hotel will be cordoned off during the auction.

The increase in security was ordered by Brazil’s President, Dilma Rousseff, in the wake of last week’s violent protest again the oil auction. Moreover, the auction’s organizers fear the event could be further disrupted by disgruntled oil workers who have been on strike for the last 4 days.

A group of strikers has camped out next to state-owned oil company Petrobras, waving placards saying “No to privatization.”

Furthermore, workers at over 40 oil platforms are striking against what they view as a step towards privatizing Brazil’s massive oil wealth. However, analysts say the workers’ strike may have more to do with a wage dispute.

“The strike . . . has more to do with wage negotiations than opposition to the Libra pre-salt auction itself, even though the latter is important for the more radical elements of the trade unions,” said João Augusto de Castro Neves, an analyst with Eurasia Group to the Financial Times. 

Brazilian oil industry workers on strike demonstrate against the auction of Libra oil field in Sao Paulo, Brazil on October 17, 2013. (AFP Photo/Nelson Almeida)

The Libra oil field, which is up for auction, is believed to hold Brazil’s largest pre-salt oil reserves. Current estimates say it could hold up to 12 billion barrels of crude, attracting over $180 billion in investment over the next 35 years.

In spite of protests criticizing the Brazilian government for selling off the nation’s wealth to the highest bidder, officials maintain that this is not a step towards privatization.

Minister of Mines and Energy Edison Lobao said Brazil was doing quite the opposite and “exploiting the immense wealth in the ground under the sea.”

According to the current conditions placed on the auction, Brazilian state-run oil giant Petrobras will have sole operator status at the oil field and a minimum of 41.6 per cent of oil produced will go to the Brazilian state.

“We don’t know how many organizations are going to participate in this auction. The important thing is that there are participants,” Lobao told O Globo.

Among the 11 companies expected to take part in the bidding are some of the world’s oil heavyweights, including the China National Petroleum Corporation (CNPC), Spain’s Repsol, Colombia's Ecopetrol and China’s Sinopec.

The US oil giants have shied away from the auction, discouraged by the conditions imposed on the auction by the Brazilian government.  

The Libra oil field was discovered by Brazil in 2010 and effectively doubled Brazil’s oil reserves.

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