Brazil Closer to Creating New Company for Pre-Salt Oil

SAO PAULO (Dow Jones Newswires), August 11, 2008

Brazil's government is closer than ever to creating a new state-run corporation to develop oil reserves in the so-called pre-salt layer off Brazil's southeastern coast, Brazil's largest newspaper, Folha de S. Paulo, said in its Sunday edition.

The so-called pre-salt oil reserves - located under more than a thousand meters of rock and salt below the waters off Brazil's southeastern coast - are considered some of the most valuable hydrocarbon acreage in Latin America.

According to the newspaper, the government is increasingly leaning toward the idea of creating a brand new, 100% government-controlled company to develop the region. Folha cited sources at the Mines and Energy Ministry.

Earlier this year, Brazilian President Luiz Inacio Lula da Silva announced the creation of a commission to study rules changes for development of the pre-salt oil reserve.

"The commission will evaluate whether it is necessary to create a special state-owned company to administer the pre-salt area or if there are other alternatives," said Energy Minister Edison Lobao in July. The commission is due to report its findings by September. 

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