Brazil Minister Suggests Debate on Easing Pre-Salt Oil Rules

Brazil opened the door for a debate on allowing foreign oil companies to operate in a region holding some of the world’s biggest discoveries this century as the state-owned producer struggles to emerge from a graft scandal.

Energy Minister Eduardo Braga said for the first time Wednesday that Petroleo Brasileiro SA shouldn’t be forced to operate all fields in the so-called pre-salt region, while adding that now isn’t the time to make changes.

“The production-sharing regime needs to be reviewed under the logic that Petrobras should always be the operator when it is in its interest, not an obligation, because we can’t require a company if it doesn’t have the physical and financial capacity,” Braga told lawmakers in Brasilia.

“For now, it isn’t the moment or the topic to debate, because I think we are still starting the debate of an area that is extremely voluminous.”

The comments come the same day Royal Dutch Shell Plc announced an acquisition of BG Group Plc, which would make Shell the second-largest oil producer in Brazil after Rio de Janeiro-based Petrobras. Braga’s comments diverge with recent statements from President Dilma Rousseff, who said in a March 31 interview that the country should pursue partnerships with foreign producers under existing contract models.

Asset Sales

Petrobras, the most indebted oil company, announced earlier this year plans to sell almost $14 billion in assets to raise cash and ease a credit squeeze amid a corruption probe that has restricted funding and paralyzed some of its suppliers.

“Petrobras could raise dozens of billions of dollars should it decide to sell minority stakes in pre-salt assets combined, and even more if Petrobras were to sell control over licensed pre-salt barrels,” UBS AG analysts Lilyanna Yang and Carlos Herrera said in a research report Wednesday. “Being the sole operator in pre-salt remains a burden.”

Lawmakers would need to approve any changes to existing pre-salt laws, even if Rousseff issued an executive order to alter the rules, said Florival Carvalho, a director at the National Hydrocarbons Agency, or ANP.

“In either case it would need to pass through Congress,” Carvalho said in a phone interview from Sao Paulo.

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