Brazil’s government is considering proposals to open operatorship of its pre-salt projects to companies other than state-run Petrobras and this change might be made, Mayer Brown partner Alexandre R. Chequer told the law’s firm’s annual energy conference in Houston last week.
“There is too much oil for one company to develop,” Chequer said. “I think the government realized it made a big mistake” in stipulating that Petrobras operate all pre-salt projects offshore Brazil.
While Brazil was establishing a new policy structure for pre-salt developments, its oil and gas bid rounds were stopped for 5 years.
The Brazilian government is the controlling shareholder of Petrobras. Chequer said he believes Brazilian officials realize Petrobras needs help with finances and technology on developing the pre-salt resources.
“They realize they need private companies, they need investors,” Chequer said. Petrobras plans to invest 221 billion dollars total during 2014-18 with 154 billion earmarked for exploration and production activities, including development of pre-salt resources in the Atlantic Ocean’s deep water offshore southeastern Brazil.
Chequer noted that Brazil’s government has honored all the oil and gas contracts that it has signed. Brazil has a presidential election scheduled for this year, but Chequer said he doubts that the election results will have any impact on existing contracts.
Petrobras has encountered a series of delays in the Atlantic’s deep waters. Meanwhile, Brazil’s production has stayed flat because of faster-than-expected declines in Campos basin oil fields.