Brazil official has opened its oil sector to foreign players
Aug. 7, 1998 Brazil formally opened its energy sector to outside exploitation when government authorities signed
concession contracts for the exploration, development and production of oil in 397 different areas.
The 3 signatories to the contracts were Petrobras, the energy watchdog National Petroleum Agency (ANP) and the Mines and Energy Ministry.
ANP Director-General David Zylberztajn said that the contracts represented "a gigantic step" which would put Brazil firmly on the map in terms of the international oil market.
President Fernando Henrique Cardoso, also present at the ceremony, said the signing of the contracts was an important step forward for Brazil, adding that international markets and investors could expect more of the same in the future.
"These 397 contracts are only a beginning. Many others will come, also with companies from other countries and not only for exploration but also for refining and transport," he said.
Taxes from the 397 concessions, of which 115 relate to exploration, should bring 60 bn reais ($ 51.5 bn) into Brazil
over the next 15 to 20 years.
The total tax package will vary by contract and have 4 criteria -- a signature bonus, special participation fee, royalties and an area rental fee.
Brazil ended 45 years of carefully protected monopoly over its oil when the ANP moved to free up some of Petrobras fields for exploitation by foreign companies.
The ANP allowed Petrobras to retain almost all of the concession areas that it had wanted, including its key Campos Basin fields. But it also lifted the monopoly over nearly all of Brazils vast sedimentary basin, most of which is unexplored and now open to development by private firms.
As a result, foreign oil firms will be able to produce oil in Brazil either through concession contracts for the newly opened areas or as operators in joint ventures with Petrobras.
Petrobras said the signing heralded a period of increased production and efficiency for the company, which aims to raise oil output from the current 1.0 mm bpd to 1.2 mm by December and 1.5 mm by the year 2000.