Oil Juniors Get Mixed Messages in Pursuit for Acreage-SEPAC

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". . .smaller oil firms including Canadian juniors could play an important role in the country's onshore industry"

Junior oil firms are receiving mixed messages from Brazilian authorities as they eagerly await a possible round for marginal, onshore acreage in Brazil, Gary Leach, the executive director of the small explorers and producers association of Canada (SEPAC) said.

"I think there have been mixed messages from Brazil. Clearly, they have a very exciting opportunity in the pre-salt areas. They are mesmerized by that, and it has a huge potential for the country," Leach said.

"I think it's taken their eyes off sending out a consistent message about their desire to attract some smaller foreign companies to onshore opportunities," he added. "There have been two steps forward, and then one step back, especially in terms of what kind of onshore blocks that could be put up for bid."

While Brazil's federal oil company Petrobras is obviously focused on directing massive amounts of new capital into the prolific pre-salt areas, smaller oil firms including Canadian juniors could play an important role in the country's onshore industry if given the opportunity.

"There is still that reluctance to recognize that Brazil will do better with foreign companies. . ." Leach said.

Brazilian hydrocarbons regulator ANP is expecting to launch the highly anticipated round 11 for new oil blocks in April or May of this year, ANP director Nelson Narciso said in October last year.

New areas in Brazil's pre-salt areas will not be included in the round, as the country is currently changing the concession framework for blocks in the area.

Calgary-based Gran Tierra Energy, which has acreage in Colombia, Peru and Argentina, is expected to participate in the round and has already opened an office in Brazil.

"We like the competitive profile in Brazil because everybody is focused on deeper water and pre-salt type of plays. . ."

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