March 28, 2018 / 5:18 PM / a year ago

UPDATE 1-Brazil court blocks inclusion of choice oil blocks in March round

(Adds detail on reason for court decision)

By Marta Nogueira

RIO DE JANEIRO, March 28 (Reuters) - A Brazilian court has blocked the inclusion of two top quality blocks in an oil auction this week, the mining and oil ministry said on Wednesday, adding that it plans to include the areas in future auctions this year.

Oil Secretary Marcio Felix said the government would seek to undo the decision, without providing details. But he said success was unlikely before the round on Thursday, which will grant companies concessions to explore and produce in the areas.

The move casts a big shadow over the concession-style auction by removing some of its most sought-after acreage.

The two blocks withdrawn from Thursday's auction are located in the offshore Santos basin and boasted minimum signing bonuses of 1.65 billion reais ($494.34 million) and 1.9 billion reias each.

Both areas were thought to include geology from Brazil's coveted pre-salt play, where billions of barrels of oil are buried under thousands of feet of salt beneath the ocean floor. The blocks also lie close to the Saturno block which is slated to be auctioned in June.

By law, blocks within the pre-salt polygon must be auctioned through so-called production-sharing agreements, where companies compete to offer the government the biggest share of so-called profit oil after costs.

Felix said the court's rationale was centered on the fact that the government could make more money if it auctioned off the two areas through production sharing arrangements instead of concessions.

$1 = 3.34 reais Reporting by Luciano Costa; Editing by Cynthia Osterman

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