Petrobras Pre-Salt Bill Has Lower House Support, Cunha Says

The Brazilian Congress’s lower house will “easily approve” a bill to relieve Petrobras of its obligation to operate new oilfields in the so-called pre-salt offshore area, according to the chamber’s president.

Ruling coalition senators are looking to push through a proposal to remove a requirement for the state-run producer to take at least a 30 percent stake in the deepwater reserves miles under the ocean floor. Eduardo Cunha, who heads the chamber of deputies, said he supports the bill and expects it to be passed in the lower house in the second half of the year.

Brazil’s oil industry is built around Petrobras, known formally as Petroleo Brasileiro SA, which is now the world’s most indebted oil company after years of being used as a policy tool. With Petrobras cutting investment and selling assets to get its finances in order, politicians and suppliers are clamoring to allow the vast pre-salt deposits to be explored without waiting for the state oil giant.

“It doesn’t make sense for Petrobras to be obligated to participate,” Cunha said in an interview Friday, in reference to future pre-salt auctions. “Petrobras should participate like any other bidder if it has the ability to do so.”

Burden

President Dilma Rousseff has resisted changes to the pre-salt exploration model that was implemented by her predecessor and political mentor Luiz Inacio Lula da Silva. Yet industry leaders, Congress and even her own energy minister have said the model is now a burden on the embattled company.

Petrobras Chief Executive Officer Aldemir Bendine has said his priority is getting the company’s debt under control. He cut investments of $44 billion a year in the company’s 2014-2018 business plan to $29 billion in 2015 and $25 billion in 2016. In the pre-salt fields, discovered nearly a decade ago, it can cost more than $200 million to drill a single well.

Cunha also said the lower house will present a proposal this month to revoke the 1998 decree that allows Petrobras to skip bidding processes when signing contracts. He said lawmakers in both houses are working on a new law to encourage good governance in all state companies and to increase competition.

“We’re discussing a specific model that doesn’t diminish Petrobras’s competitiveness, while discouraging the kind of concentration that allows for corruption,” Cunha said.

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