Lula made rules on exploiting oil reserves
Brazil on Monday announced rules governing potentially huge reserves of oil discovered off its coast in the past two years. The finds have been compared by industry leaders to the North Sea stocks of the 1970s.
The announcement by Luiz Inácio Lula da Silva, president, answered questions about the role of the Brazilian state in exploiting the reserves but delayed the politically difficult
Mr Lula da Silva said four bills would go before Congress under a fast-track system that gave legislators 90 days to agree or disagree with them.
The bills would introduce a “shared production” regime to replace the concessions-based system; create a state oil company, Petrosal, to handle the reserves; set up a fund to manage the government’s revenues from the reserves and direct them towards social spending on areas such as poverty relief, education and infrastructure; and allow a $50bn issue of new capital in Petrobras, the government-controlled but publicly traded oil company.
Petrobas shares fell more than 5 per cent on Monday in São Paulo as the market’s main share index dropped about 2 per cent. The group’s shares have lost more than 8 per cent in the past week because of uncertainty over the new regime and falling international oil prices.
No size has yet been put on the so-called pre-salt reserves, discovered in 2007 at depths of up to 7,000 metres below sea water, rock and a hard-to-penetrate layer of salt.
Estimates range from 60bn to 100bn or more barrels of oil and natural gas equivalent, an enormous addition to Brazil’s proven reserves of about 14.4bn barrels and enough to change it from an oil importer into a major exporter.
Several concessions were granted in the pre-salt fields – an area about 800km long and up to 200km wide – before their potential was understood. Those concessions will remain in place.