Brazil's Lower House to Approve Oil Law by Nov 10

RIO DE JANEIRO (Dow Jones), Sept. 29, 2009

Brazil's lower house should approve the four bills that make up the country's new regulatory framework for the oil industry by Nov. 10, Mines and Energy Minister Edison Lobao said Monday.

"We have a guarantee from lower house leaders that the laws will be approved by Nov. 10," Lobao was quoted by the local Estado news agency as saying. Lobao made the comments on the sidelines of an event in Sao Paulo.

Passage by the lower house is the first step in approval of the new regulatory regime, which will give Brazil's government a greater stake in recently discovered offshore oil reserves. The bills will then move to Brazil's Senate for debate.

The minister also said that the government will have, at a minimum, a 50% share of so-called profit oil under the proposed production-sharing model. Profit oil is the amount of oil produced after discounting expenses from development of an oil field.

"The companies that offer a greater slice of profit oil to the government will get subsalt blocks," Lobao said.

The so-called subsalt oil discoveries were made recently under a thick layer of salt in the Santos Basin off the coast of Sao Paulo and Rio de Janeiro states. The oil lies under more than 2,000 meters of water and a further 5,000 meters under sand, rock and a shifting layer of salt.

The first of the subsalt discoveries, called Tupi, was estimated to hold recoverable reserves of between 5 billion and 8 billion barrels of oil equivalent. That was the Western Hemisphere's largest oil find in more than 30 years.  

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