Brazil's Lower House Approves 3rd Oil Bill

Reuters reported Wednesday that Brazil's lower house of Congress has approved the third of four bills to restructure the South American country's oil legislation by placing more control over and profits from new subsalt reserves into the government's hands.

Approved yesterday by the Chamber of Deputies, the bill is designed to direct oil revenues into an investment fund for Brazil's social and economic development projects. Later today, the Chamber is expected to vote amendments to the bill, Reuters said.

Brazil's ultra-deep offshore oil fields are situated beneath a layer of salt rock predominantly in the Santos and Campos Basins, and new subsalt oil developments will likely cost $400 billion. Such development of ultra-deep oil reserves could catapult Brazil as one of the highest-ranking world oil exporters.

Nearly one-third of this promising subsalt area has already been tendered to oil companies, Reuters noted. 

The fund created by the third bill will collect all of the government's revenues -- estimated at $88 billion -- generated over the lifetime of these pre-salt fields tendered out until 2009, as well as fields to be tendered later on, the report said.

In 2009, the Chamber approved two separate bills -- one to create a new state agency to administer subsalt oil contracts, and the other to change the exisiting concession system to a production-sharing model, Reuters said. The latter bill requires state-run oil giant Petrobras to operate all new offshore subsalt projects with a minimum 30% stake.

The final bill up for approval involves the allocation of new oil fields held by Petrobras which would raise the company's capital, Reuters said.

All four bills will then move on to the Senate; Congress is expected to pass the bills by late May.