Aug. 29 (Bloomberg) -- Brazil needs new ways to tax oil companies because the current oil-concession auction system isn't providing the government with sufficient revenue from resources, ruling party Senator Aloizio Mercadante said.

``Nobody likes to go to the dentist, but it has to be done,'' Mercadante, one of the most senior politicians in President Luiz Inacio Lula da Silva's Workers' Party, said today in Rio de Janeiro. ``The amount we received at auctions and from royalties has not been enough.''

Mercadante also said that all the government's efforts to develop offshore oil fields in the so-called pre-salt region should strengthen state-controlled oil company Petroleo Brasileiro SA and that the government may trade oil for new shares in Petrobras, as the company is known.

To contact the reporter on this story: Jeb Blount in Rio de Janeiro at jblount@bloomberg.net.

Last Updated: August 29, 2008 13:04 EDT