Petrobras Requirement Removed in Brazil’s Pre-Salt Exploration

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – The House of Representatives in Brazil approved this week a bill that removes the participation requirement of state-owned Petrobras in all of pre-salt oil exploration in the country. Approved by 292 votes in favor and 101 against, the decision outraged many Congressional representatives who say Brazil would be giving away its petroleum to foreign companies.

“The Temer government and Congress have done the dirty work for multinationals, delivering our pre-salt free of charge,” said Congressional representative Paulo Pimenta of the PT (Workers Party). Pimenta was one of the dozen representatives wearing orange Petrobras jackets during the voting session.

Congressional representatives opposed to the bill claim its approval will bring huge losses to Petrobras and the Union. According to them, in the Libra field alone the country could lose up to R$246 billion in revenues if the state-owned company is not participating. Those in favor of the bill say the state-owned company should only seek profitable operations.

Currently, the law establishes that pre-salt exploration operations must necessarily have at least thirty percent of Petrobras’ participation. With the removal of the requirement, analysts say these oil fields will become more attractive to foreign investors.

The bill originated in the Senate, introduced by former Senator and now Foreign Relations Minister José Serra. He argued the bill would not mean the company would not be able to enter into the exploration project, but that it could choose if it was advantageous to do so.

“It is an absurdity that Petrobras is required to enter all pre-salt exploration areas, even if it is [financially] unable,” he was quoted as saying to local press.