Petrobras to Hold Minimum Stakes of 30% in Pre-Salt Consortia

Petrobras CEO, José Sergio Gabrielli de Azevedo, participated in the Estadão Debates series yesterday, September 30, at the Estado Group auditorium, in São Paulo.The event focused on the debate surrounding the new regulatory framework for oil exploration in the pre-salt, on how the revenues will be distributed, and on how to repair environmental damage.

In addition to Gabrielli, senator Tasso Jereissati (PSDB-CE) and João Carlos de Luca, the CEO of the Brazilian Oil Institute (IBP), also participated in the plenary session about the new exploration model, which was moderated by journalist Celso Ming.IBP's CEO acknowledge Petrobras' role as a major driving force behind Brazilian development, but questioned the Government's proposal for the Company to be the sole pre-salt operator.

Petrobras' CEO emphasized the fact that being the sole pre-salt operator does not mean the monopoly will be reinstated in the country. To Gabrielli, "the operator is the organizer, the party that makes the operation feasible. That is how it is all over the world. Being the operator does not mean being the only company," he said.

This means Petrobras, the company that pioneered pre-salt exploration, will hold minimum stakes of 30% in the consortia formed to explore the blocks. Other national and foreign capital companies may participate in the bids and become Petrobras partners in exploration activities in the new areas. Partnerships are already a reality in pre-salt exploration, such as in Tupi. They allow companies to share the high exploration and production costs and, later, the profit made with the sale of the oil and gas that is produced.

De Luca also said he is concerned with Petro-Sal "having too much power to intervene in the sector." Gabrielli clarified that "the state-owned company's only role will be to control operation costs by means of strict inspections. It will not have access to pre-salt revenues, which will be passed directly on to the Social Fund," he emphasized.

Tasso Jereissati discussed the possibility of adjustments being made to the current law that controls exploration in Brazil, something which he argued would avoid creating specific legislation for the pre-salt.

Petrobras' CEO stressed the new model does not change agreements currently in effect, which will be fully respected. "The current exploration model was created in a period in which exploratory risks were very high and in the auction held in 2003, for example, Petrobras was the only company to bid for blocks and take such risks on. With the pre-salt, the situation has changed, since the risks are very low and that is why there is a need for this new model," he said.

Espírito Santo governor, Paulo Hartung, federal representative Fernando Gabeira (PV-RJ), and consultant Wagner Freire, formerly the Exploration & Production for Petrobras, participated in the second plenary session, which debated pre-salt oil royalty distribution and the importance of discussing the environmental issues.