Sharing pre-salt spoils: new bill would require producing states to part some of their oil and gas revenue.
Brazil oil bill clears hurdle
Brazil's lower house of Congress has approvedan amendment to a government oil reform bill that could deprive the biggest oil producing states of a large chunk of royalty revenues.
The amendment, which was approved in a 362 to 72 vote with two abstentions, would force the three largest oil-producing states - Rio de Janeiro, Espirito Santo and Sao Paulo - to share more revenue from new fields with other states, according to Reuters.
Yesterday's ballot marked the approval by the Chamber of Deputies of President Luiz Inacio Lula da Silva's entire oil reform proposal, which is made up of four separate bills. The reform gives the government more control over both massive deep-sea oil reserves and state-owned oil company Petrobras .
Developing the new oil fields, which lie below a thick layer of salt rock deep beneath the ocean floor, will cost an estimated $400 billion and could make Brazil one of the world's top 10 oil exporters.
Under terms of the amendment passed, the bulk of royalties excluding those entitled to the federal government will be split by half between all states and municipalities. Under such criteria, Rio and Espirito Santo would collect way less from royalties than now, lawmakers said.
But Candido Vacarezza, the leader of the ruling coalition in the house, said Lula is likely to veto the amendment, alleging constitutional flaws.
The reform proposal now goes to the Senate for passage, months before the start of the presidential campaign. Analysts expect portions of the bill to be approved before the campaign starts in July and a the reminder to be passed in 2011.
It also created a fund to invest oil revenues in education, health, environment and other social and economic development projects.
Petrobras shares, which analysts say have lagged in recent months because of uncertainties related to the passage of the reform bill, rose 1.4% to 37 reais yesterday.