Brazil reaped a billion-dollar harvest yesterday with a frantic sale of oil and gas exploration concessions, despite a boycott of the auction by the major multinationals.

The first sale of exploration acreage by Brazil since the discovery of the Tupi field excited keen interest, generating bids worth $1.14 billion (£550 million) for 117 blocks – but the removal of 41 blocks from the auction by the Government kept the heavy-hitters on the sideline.

ExxonMobil, Shell and Chevron had hoped to bid for the 41 blocks, which are located in deep water and in similar geology to Tupi, where Petrobras recently announced reserve estimates of between five and eight billion barrels of oil.

The Government decided to hold back the most valuable acreage but still secured almost double the revenues compared to the last auction in 2005. Had the deep water blocks been offered in the auction, Brazil’s National Petroleum Agency had expected to generate between $4 billion and $5 billion in revenues.

The biggest winner in the auction was OGX Petróleo e Gas Participacoe, a new venture led by Eike Batista, a Brazilian mining entrepreneur. OGX outbid Petrobras in the most sought-after acreage in the Campos Basin. Most of Brazil’s existing oil output comes from the Campos Basin, offshore of Rio de Janeiro, but the Tupi find is in deeper water and has more difficult geology.

Brazil produces two million barrels per day of crude oil, but the Tupi find will increase dramatically the country’s oil output, transforming Petrobras into one of the world’s major oil companies. Brazil is expected this year to become a net oil exporter and the Tupi field alone will add the equivalent of the entire remaining reserves of the North Sea to the country’s hydrocarbon assets. By 2015, Tupi alone could be producing one million barrels a day.

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