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Petrobras revising projects for new business plan

Oil & Gas Journal

As a reward for the risk being assumed, the state hands control of any oil discovered to the operating companies and is paid royalties instead of oil.

According to analyst BMI, however, "It would appear that many in the Brazilian government now support the implementation of production-sharing agreements, under which hydrocarbon reserves remain state property and international oil companies are given a share of output."

Gabrielli recently defended the proposed revision of Brazil's oil legislation, saying that the existing regulations made investment so risk-free that it was like purchasing a "winning lottery ticket" especially since, in his view, the exploratory risk is very low in the presalt area where blocks to be auctioned off share geological conditions similar to those where the previous discoveries were made.

Echoing earlier statements by Brazilian President Luiz Inacio Lula da Silva, who last year said that those blocks in the presalt play that have already been auctioned off won't have their contract terms changed, Gabrielli said Petrobras was carefully considering the impact of reform and that any rule changes would apply only to new concessions, not existing contracts.