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BRAZIL'S PRE-SALT REGION UNDER STRICT GOVERNMENT CONTROL

Brazil's Pre-salt Region under Strict Government Control

Study Released August 05, 2011

Commodity Report - Crude Oil - July 2010

In June, Brazil’s government passed two important bills that will affect the country’s oil industry development. The first bill allows the government to transfer drilling rights for up to 5 billion barrels of oil equivalent (boe) to Brazil’s largest energy company, the state-controlled Petrobras, as well as participate in the company’s planned rights issue in return for more stock and greater control. The second bill enables the government to replace the concession system, which was used to bring foreign investment into the offshore sector with production-sharing contracts (PSCs) for the pre-salt area1 and other strategic areas having the same potential as the pre-salt. Petrobras would be an operator of all contracts under the PSC framework, with a minimum 30 percent working interest. Output will belong to the government under a production sharing model, and participating international oil companies (IOCs) will receive a fixed share of the revenues..... Download full report.

July 2010