News

ARTICLE

Date ArticleType
10/7/2016 Member News
Brazil to Allow More Foreign Investment in Oil Projects

OFFSHORE:

Brazil to allow more foreign investment in oil projects

Published: Friday, October 7, 2016

Brazil's lower chamber of Congress has ended a monthslong debate and approved a bill that would allow for more foreign investment in its offshore oil fields. The bill has already passed the Senate. The nation's president, Michel Temer, has indicated he will sign it into law.

The new legislation would overturn an existing law, which requires the state-owned oil company Petróleo Brasileiro SA — or Petrobras — to own at least a 30 percent share of any offshore pre-salt drilling projects. Petrobras has accumulated a mounting debt due to these costly deepwater drillings.

Proponents say the new bill would attract foreign capital and create more jobs at a time when Petrobras doesn't have the resources. However, opponent lawmakers argue the change is a setback for Petrobras and would "dismantle the state."

On the other hand, the financially troubled Petrobras has been anticipating the change, saying it would free the state-run oil company from its minimum 30 percent stake obligation, which has become an onerous burden.

"We'll carefully look at eventual opportunities in the pre-salt when bids resume in Brazil, and we'll participate based on our own choices," the company said (Trevisani/Kiernan, Wall Street Journal, Oct. 5). — MM