Brazil backpedals on Petrobras subsalt mandate
Adopted in 2010, the controversial sole operator provision has come under sharper scrutiny in recent months as Petrobras grapples with the fallout of a widespread corruption scandal.
"We must have the humility and courage to discuss this [sole operator] model," Braga told a congressional committee yesterday, one day after news broke of Shell?s planned \$70bn takeover of BG.
Petrobras should operate subsalt projects "when there is interest, not the obligation," he said, suggesting that the firm could be given a right of first refusal for the lead role.
Congressman Jos? Serra of the opposition Social Democracy party (PSDB) already introduced a bill last month that would eliminate the provision. Although lawmakers have yet to debate the initiative, any rule change is likely to spark resistance from nationalist rank and file members of the ruling Workers party (PT).
Advocates of allowing companies other than Petrobras to operate subsalt acreage contend that Petrobras has been too weakened by this year?s lower oil prices and the financial and operational impact of the scandal to effectively fulfill the exclusive role.
Even before the corruption case erupted last year, critics had argued that Petrobras would be overextended by the rule, hampering development of subsalt reserves.
The PT has so far stood by the subsalt production-sharing model, which was adopted under popular former president Luiz In?cio Lula da Silva.
The party has also reiterated its support for local content rules that guarantee Brazilian suppliers a piece of the lucrative supply chain. But with several key local contractors in financial straits because of the scandal, some oil and infrastructure projects are now stalled, including the 165,000 b/d Comperj refinery project that is already more than 80pc built.
Around 25 mostly Brazilian construction firms implicated in the scandal are blocked from bidding on future Petrobras contracts. Three have already filed for bankruptcy, and more are expected to follow.
A change to subsalt rules could help to rejuvenate upstream interest in Brazil ahead of a planned post-salt licensing round later this year, especially at a time when Mexico has stolen much of the limelight. Another tender for subsalt blocks is not expected to take place before 2016.
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