• 3 minutes Oil Price Could Fall To $30 If Global Deal Not Extended
  • 8 minutes Why Is America (Texas) Burning Millions of Dollars Per Day Of Natural Gas?
  • 11 minutes Is $60/Bbl WTI still considered a break even for Shale Oil
  • 15 minutes CNN:America's oil boom will break more records this year. OPEC is stuck in retreat
  • 4 hours The Pope: "Climate change ... doomsday predictions can no longer be met with irony or disdain."
  • 1 day Hormuz and surrounding waters: Energy Threats to the World: Oil, LNG, shipping markets digest new risks after Strait of Hormuz attack
  • 41 mins Greenpeace claims one oil rig is "pushing the world closer to a climate catastrophe"
  • 3 mins Middle East on brink: Oil tankers attacked off Oman
  • 21 hours Russia removes special military forces from Venezuela . . . . Maduro gone by September ? . . . Oil starts to flow ? Think so . .
  • 8 hours The Latest: Iranian FM Says US Cannot Expect To ‘Stay Safe’
  • 2 days Never Knew Gasoline Prices were this important!
  • 1 day The Magic and Wonders of US Shale Supply: Keeping energy price shock minimised: US oil supply keeping lid on prices despite global risks: IEA chief
  • 1 day Plants are Dying
  • 7 hours Emmissions up, renewables nowhere
  • 1 day We Are Better Than This
  • 2 days As Iran Nuclear Deal Flounders, France Turns To Saudi For Oil
  • 2 days (Un)expectedly: UK Court Sets Assange U.S. Extradition Hearing For February 2020
Alt Text

This Overlooked Canadian Oil Niche Is Making Traders Billions

As major pipeline bottlenecks continue…

Alt Text

BP: Petrochemicals Drive U.S. Oil Demand Boom

The United States saw its…

Alt Text

OPEC+ Has Only One Choice As Oil Prices Slide

With oil prices falling on…

Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

More Info

Trending Discussions

Brazil Eyes $30 Billion Offshore Oil Boom

Over the past few years, Brazil has held several very successful oil auctions under production-sharing contracts in its pre-salt layer, attracting major oil companies to its prized offshore oil area.  

Now President-elect Jair Bolsonaro wants to open more of the pre-salt assets—an area currently exclusively in the hands of state oil firm Petrobras—to private investors, hoping to earn US$31 billion (120 billion Brazilian reais) that could help narrow Brazil’s massive budget deficit.

However, as Bolsonaro prepares to take office on January 1, 2019, his transition team may need to negotiate how different Brazilian states and municipalities could divide the revenues from the potential sale of stakes in more pre-salt fields to foreign oil firms. This uncertainty is not welcome news for Big Oil, which has expressed interest in the area that has been explored to some extent and proven to hold much more oil than initially thought.

The area at stake is the so-called ‘transfer of rights’ area, where Petrobras holds 100 percent of the rights to produce 5 billion barrels of oil. The state oil firm has explored the area and found that a lot more oil lies in this low-risk offshore zone. There are estimates that the ‘transfer of rights’ area could hold up to 15 billion barrels of oil in excess of the 5 billion barrels to which Petrobras is entitled to produce when the government transferred the area to the state firm in 2010.

Brazil has been looking to pass legislation to remove the obligation that only Petrobras can produce oil in the ‘transfer of rights’ area. Far-right President-elect Bolsonaro, who had supported state control over the oil assets in the past, now plans to sell oil and other energy assets and supports the bill to allow foreign participation in the currently Petrobras-only ‘transfer of rights’ area, Bolsonaro’s advisor Luciano de Castro told Bloomberg earlier this month. Related: India Looks To Double Its Natural Gas Usage

But last week, the head of Brazil’s Senate Eunicio Oliveira put on hold a bill authorizing oil auctions in the zone, dealing a blow to the president-elect and potentially stalling the bill further. At a meeting with mayors on Friday, Oliveira said that the bill to authorize the sale of stakes in the ‘transfer of rights’ area to foreign firms would be approved if it guarantees that part of the revenues would go to states and municipalities.

Bolsonaro’s plan for the oil auction in this area hit a snag even before the President-elect takes office. Bolsonaro is the third Brazilian president looking to authorize sales to foreign firms in the ‘transfer of rights’ area. But his transition team will probably have to negotiate with various states and municipalities how future revenues would be divided, if the plan is to pass in Parliament.

In the past, Bolsonaro favored state control over energy assets, but he has changed his stance before the presidential election race and now he is lining up a pro-business team to lead the country and picked a privatization advocate, Roberto Castello Branco, to be Petrobras’s new chief executive officer.

If Bolsonaro and his team manage to push the ‘transfer of rights’ area bill through Brazilian politicians from all sides, the potential resources opening for Big Oil to bid are huge.

The area is low-risk—Petrobras has explored parts of it and has found much more oil than originally thought. According to UBS analyst Luiz Carvalho, projects in the area can be viable even if oil prices were to drop to $20 a barrel, Bloomberg quoted the analyst as saying at an event in Rio last week.

Brazil can become an even more attractive destination for Big Oil than it is now if it manages to remove regulatory and political hurdles to auctioning more of its coveted pre-salt oil fields.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage

Trending Discussions


Leave a comment

Leave a comment





Oilprice - The No. 1 Source for Oil & Energy News