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News > Latin America

Brazil Approves Handing Pre-Salt Oil Reserves to Multinationals

  • Petrobras believes Brazil's pre-salt discovery is one of the world's most important in the past decade.

    Petrobras believes Brazil's pre-salt discovery is one of the world's most important in the past decade. | Photo: Reuters

Published 5 October 2016

This is the most recent move by the Senate-imposed government of Brazil to privatize key industries in the country.

Brazil's chamber of deputies approved Wednesday to privatize the country's offshore pre-salt assets and allow multinationals to own exploration rights, a move social organizations argue will put the country's natural resources in foreign hands. 

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Brazilian lawmakers vote 292 against 1010 to approve Bill 4567/16, to remove Petrobras' exclusive rights over the exploitation of Brazil's pre-salt reserves. The bill had already passed the Senate and to become law it will need to be signed by coup-imposed President Michel Temer, who has said we would approve it.

This comes after Petrobras announced Monday it had discovered an important pre-salt field—oil reserves under fields of salt—in Albacora, about 100 kilometers off the coast of Rio de Janeiro.

“This is a step toward dismantling the state,” said Valmir Prascidelli, a lawmaker from the leftist Workers’ Party, or PT, “It gives the pre-salt to the multinationals.”

Brazil's previous offshore oil exploration framework was designed by former President Luiz Inacio da Silva of the Workers' Party and explicitly favors the state's interests via state-run oil company Petrobras, to the disappointment of multinational oil companies.

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In 2010, a reform introduced by the Lula administration required Petrobras to be the sole operator in all pre-salt fields with a minimum 30 percent stake, restricting private investment.

Brazil's recently-installed Foreign Minister Jose Serra, who introduced the bill in the senate, told foreign oil companies back in 2009 that the PT's framework for offshore oil exploration could easily be reversed, according to WikiLeaks.

Serra, who was then seeking the presidency, told Chevron that he would work to change the framework to suit the oil giant's interests. Chevron had said they would refuse to even make a bid under the current framework.

“Let those guys (PT) do what they want. There will be no bid rounds, and then we will show everyone that the old model worked ... And we will change it back,” Serra told Patricia Pradal, head of government relations for Chevron.

With production increasing from approximately 41,000 barrels per day in 2010 to a million in mid-2016, Petrobras believes Brazil's pre-salt discovery is one of the world's most important in the past decade. It is believed that reserves of over 50 billion barrels could exist in the basin, nearly four times the current national reserves of roughly 14 billion barrels. 

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