Brazilian Congress to Get New Oil Law by August

RIO DE JANEIRO (Dow Jones Newswires), Jun. 2, 2009

The Brazilian government will send a new regulatory regime for the country's oil and natural gas industry to Congress by August, Mines and Energy Minister Edison Lobao said Tuesday, according to a news report.

A government panel formed by President Luiz Inacio Lula da Silva will complete its work on the proposed changes by June 15, Lobao told the local Estado news agency in Brasilia. Lobao was to testify before the Lower House.

The new regulations will cover exploration and development of Brazil's subsalt reserves, located deep off the country's Atlantic Ocean coast. Congress would be expected to pass the legislation in about six months, Lobao said.

"This year, we will have a new regulatory regime for the subsalt," Lobao said.

The minister also once again stated his desire to create a separate state-owned company to manage the subsalt oil assets now under control of the government. The working panel is currently discussing the option, and has been meeting two or three times a week to complete its work.

Dubbed Petrosal, the company would manage development of the reserves and production-sharing agreements based on a model used in Norway.

Last year, Lula formed a government working group to study possible changes to the country's oil laws that would give the government a greater stake in newfound deposits. But final approval of the proposals had been delayed repeatedly.

Lula wants to maximize the government's take from the possibly massive reserves, using the proceeds to end poverty and improve education in South America's largest country.  

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