End of Petrobras Quota Divides Outlook on Brazil Economy

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – The recent vote by Brazil’s Chamber of Deputies to ease a requirement that states that Petrobras must participate in all pre-salt oil explorations in the country has rendered applause and criticism. Those who approve the easing say that the move will attract more foreign investors while those who oppose it claim Brazil will be giving away its petroleum to foreign companies.

For IBP’s (Brazilian Institute of Petroleum, Gas and Biofuels), executive secretary Antonio Guimarães, the easing of the requirement means that Petrobras will not be setting the rhythm of operations. “(With) only one company (Petrobras) to develop the pre-salt operations, the speed of this development was limited to the speed the company (Petrobras) was able to achieve. When we allow other companies to (develop), we multiply this speed,” Guimarães told journalists earlier this week.

According to Guimarães, without the participation requirements of Petrobras other companies will be encouraged to participate even more in the process, accelerating production and generating jobs, income and taxes for the country. “This means that we will see suppliers, jobs and investments coming gradually,” said the executive.

IBP estimates that under these new conditions investments in already-discovered pre-salt areas alone may surpass US$100 billion.

According to the Oil Workers Federation (FUP), however, the measure can bring tremendous losses to the entire production chain, harming technological development and making the country a mere exporter of raw materials.

The Federation also argues that foreign investment does not necessarily help Brazil’s oil industry. “Over these two decades, since the end of the Petrobras monopoly (1999), none of the private oil companies that began operating in Brazil have ordered ships, platforms or equipment from the domestic industry,” the Federation said in a statement on its website.