Brazil’s Senate Approves Reducing Petrobras Requirements

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – In addition to the on-going impeachment discussions in Congress and the Lava-Jato (Carwash) mega corruption scandal disrupting the economic and political scenario in Brasilia, this week President Rousseff’s PT party was also dealt a blow in the Senate, with the approval of a bill which ends the requirement for Petrobras to participate in at least thirty percent of all pre-salt oil exploration in the country.

The PT party, a staunch defender of the ‘oil is ours’ principle started out squarely against opposition leader Jose Serra’s bill to ease exploration requirements for the state-owned company, stating that this would equal giving away Brazil’s natural resources to foreigners.

As the discussions progressed however, the Rousseff Administration eased its objections to the bill, to the disapproval of many PT senators. The Administration’s change of heart, say analysts, was swayed by the oil-giant’s current financial troubles, being forced to drastically cut new investments.

According to Mines and Energy Minister, Eduardo Braga, although the government continues to defend the maintenance of the current policy, in a democracy all different sides should be heard and a compromise reached.

Braga said that there were three different fronts in the Senate defending three different positions. “The Senate voted in the intermediate solution, between the position defended by the PT and the government and the position which would ease (requirements). It (winning position) maintains the State’s control and strategic policies,” he told reporters.

IBP (Brazilian Petroleum, Gas and Biofuels Institute) called the approval of the bill by the Senate ‘an important advance for the country and the sector’. According to the entity the withdrawal of the requirement is likely to attract new investments, set a new rhythm of development in the pre-salt exploration segment and favorably affect the entire oil industry supply chain.

“Experience has shown that the diversity of operators, with different strategies and skills favor the technological development, stimulates the Brazilian goods and services industry, promotes competitiveness and increases the value of the country’s natural resources,” an entity spokesperson told Agencia Brasil.

For the government the bill continues to guarantee Petrobras’ sovereignty in relation to the exploration of oil fields in the country, since the state giant has the prerogative of choosing if it wants to participate in the exploration and any decision taken by the oil company will have to be approved by Brazil’s President.