Congress opens Brazil's huge "pre-salt" oil fields to the private sector

Congress opens Brazil's huge “pre-salt” oil fields to the private sector

Saturday, November 12th 2016 - 21:27 UTC

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Huge amounts of oil could be lying under the pre-salt fields, but high costs of equipment and human capital are necessary to get extraction started

Petrobras will begin selling off huge “pre-salt” oil fields to raise cash for the desperate Brazilian national oil company, according to new legislation passed by Congress. Politicians in the lower house had fought against the bill, but lawmakers succeeded in pushing the bill through during a late-night session, and the vote stood at 251-22 by the end of the night.

President Michel Temer, who took power when Dilma Rousseff left the office in August after facing impeachment on corruption charges - will either adopt or reject the bill once a technical analysis of its contents has been completed.

Experts have predicted that huge amounts of oil could be lying under the pre-salt fields, however the high costs of the equipment and human capital necessary to get extraction started have led Brasilia’s lawmakers to consider offering foreign firms a go at the sites.

Last week, Brazil’s Oil and Gas Secretary announced that the country would continue to increase output over the next few years, despite pushes by the Organization of Petroleum Exporting Countries (OPEC) for all of the world’s major oil producers to scale back output.

In September, over 11,700 Petrobras employees signed up to get fired through the firm’s voluntary dismissal program. The public company set up the program to reduce debt and reduce operational costs by US$10 billion in the coming years as global oil prices stay low and cut into government revenues.

Petrobras later said that it still plans to sell US$15.1 billion assets by the end of this year, and generate another US$19.5 billion from asset sales and partnerships in the next two years. Total asset sales for the next 10 years are planned at US$40 billion.

Categories: Energy & Oil, Brazil, International, Mercosur.

Top Comments

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:o))
If the Projection is for US$ 40B in TEN years; in reality, count on it to be “almost nothing” [obviously, with “explanations”]!
Nov 14th, 2016 - 09:32 am +1
Jack Bauer
While PB's debt is currently at USD 125 billion, getting rid of assets to the tune of USD 40 billion over the next tens years, may seem like a piss in the ocean, but let's look at it from the other angle, or : don't fire those who agree to join the voluntary dismissal programme, don't sell off assets (which do not refer to the company's core objective, and are not profitable), and in 10 years the company can declare bankruptcy. If Brazil, and PB, were to ever see the subsalt oil being extracted, the only way was to relinquish control over many oil fields (by revoking the obligation to participate in all investments with a share of 30% of the total investment) and allow foreign investors to come in....what's the point of having so much wealth under the ground (to last how much longer, no one knows) if you cannot tap in to it ?
If it's unfortunate and “too little too late”, it is only because under the PT, things would never change, and the only certainty is that they would break Brazil and PB (beyond recovery), re which the a.holes have done a pretty good job.
Nov 14th, 2016 - 07:14 pm +1
ChrisR
Too little and way too late.

Must try MUCH harder.
Nov 14th, 2016 - 06:39 pm 0

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