Bloomberg News

Lula to Get New Brazilian Oil Rule Options in 15 Days

June 01, 2009

Brazilian President Luiz Inacio Lula da Silva will receive proposed changes to the country’s oil legislation within 15 days and may seek to have a bill passed by congress as soon as possible, Energy Minister Edison Lobao said.

After congressional approval, a new oil law could be in place within about four months, Lobao told reporters today in Sao Paulo. Under current rules Brazil auctions exploration and production rights to the highest bidder.

A committee of Brazilian ministers and the president of the state-controlled oil company, Petroleo Brasileiro SA (PETR4), known as Petrobras, has been considering changes to the country’s oil rules since the November 2007 announcement of Tupi, the largest oil discovery in the Americas in three decades.

Lobao has said that revisions in the regulations will only apply to the so-called pre-salt area near Tupi, an offshore region that may hold more than 50 billion barrels of oil, according to Haroldo Lima, head of Brazil’s petroleum agency.

The government also is considering a plan to allow Paraguay to sell electricity to Brazil, Lobao said. The proposal may include a provision allowing Paraguay to sell power to its largest neighbor from generation stations other than the Itaipu dam, a hydroelectric project owned jointly by the two countries, Lobao said.

Itaipu, which stretches across the Parana River on the Paraguay-Brazil border generates more electricity than any other power station in the world.

To contact the reporter on this story: Jeb Blount in Rio de Janeiro at jblount@bloomberg.net Telma Marotto in Sao Paulo at tmarotto1@bloomberg.net

To contact the editor responsible for this story: Dale Crofts in Buenos Aires at dcrofts@bloomberg.net


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