Brazil has proposed sweeping changes to its laws governing the development of one of the world's most promising new sources of oil supply. The country's president, Luiz Ignacio "Lula" da Silva, while unveiling plans to give the state much more control over oilfields off Brazil's coast at the expense of foreign energy companies, hailed the long-awaited reforms as a "new independence day" for South America's most populous nation. The oil deposits, located in the deep waters of the South Atlantic and trapped thousands of metres below layers of shifting sand and rock salt, may be among the world's most costly and technically challenging to develop. But the fields struck so far contain billions of barrels of crude and have set off a feeding frenzy among international oil companies seeking to exploit them. Mr da Silva wants to ensure that Brazil gets most of the revenue from exploiting the resources, even at the risk of scaring off foreign investment and losing access to the technical expertise of major oil firms. "Petroleum and gas belong to Brazilians and to the government. The model to be adopted must ensure that the biggest portion of income stays in the hands of our people," Mr da Silva said in Brasilia, the capital, at an event to unveil the plan. The country's economic prosperity for decades to come is riding on the success of his proposal, which requires the approval of both houses of the Brazilian congress. Under the proposal, Brazil would switch from the current concession system, in which the government receives only royalties and taxes on oil produced from its fields, to production-sharing agreements. The government would create a new state holding company, Petrosal, to manage new projects and the new system of oil contracts. It would also make Petrobras, the state-controlled oil firm, the sole operator of new subsalt oilfields, with a minimum 30 per cent interest in all future projects. The plan calls for a US$50 billion (Dh183.5bn) infusion of state capital into Petrobras to increase the government's existing 51 per cent holding. Critics, however, said the reforms would give politicians too much influence over Brazil's oil industry. The proposal gives an "absurd amount of power" to a Cabinet-level energy commission, providing openings for political interference in operations decisions, Marilda Rosado, a Rio de Janeiro lawyer specialising in energy, told Reuters. Most foreign energy companies were non-committal on Mr da Silva's proposal, but Chevron, the US oil firm, called Brazil "the future for the oil industry". Royal Dutch Shell, the biggest European oil group, said it had put its Brazilian oil exploration programme on hold while it assessed the proposed new rules. The oil reforms could have a bumpy ride through Brazil's congress, as not all the country's politicians support them. "The risk is a slower development of the oil sector," said Luiz Paulo Vollozo Lucas, a congressional deputy from Brazil's opposition PSDB party. "We will attack the proposal." Anthony Sabino, a professor of business law at St John's University in New York, said: "President Lula's actions might be popular in his country, but will greatly hamper Brazil reaping the riches from what are estimated to be billions of barrels of oil off its shores." email@example.com
- Putin’s power play a product of his unchallenged gas dominance
- German oil and gas producer Wintershall says Abu Dhabi a platform for growth in Arabian Gulf
- Oil falls following US stockpile sale
- In pictures: Best business images of the week
- Chief of Saudi chemicals giant Sabic urges regional innovation
- In pictures: Polar vortex gives new life to ageing US power plants
- Most Viewed
- Most Commented
- Emirates Airline says cabin crew policies are ‘generous’
- Expanding Emirates Airline could outgrow Dubai hub
- The best places in the world to buy property today
- Dubai landlord accuses tenant of ‘subletting to bachelors and spinsters’
- Executive travel: Bliss en route to Boston with Emirates Airline business class
- Most Viewed
- Most Commented
- Federal Traffic Council approves proposal to lower UAE driving age
- Men ripped off woman’s clothes in bathroom, Abu Dhabi court hears
- Ties no longer mandatory for Dubai cabbies amid safety concerns
- Live blog: With the emergency workers at Rashid Hospital Trauma Centre
- Dubai launches mobile app to faciliate parking and payment
In pictures: Chrysler’s Cinderella story
The carmaker’s Sterling Heights plant was almost shut down after bankruptcy in 2009 but is now a symbol of how far Chrysler has come according to CEO Sergio Marchionne.
In pictures: Britain’s shipbuilding legacy
The British shipbuilding industry has been through a turbulent time after defence contractor BAE Systems announced in November that it planned to lay off 1,775 ship workers across the UK. The cuts signal the end of more than 500 years of shipbuilding in Portsmouth on England’s south coast.
In pictures: New Lamborghini showroom opens in Abu Dhabi
Lamborghini launched its latest super car, the Huracán LP 610-4, in the Emirates at the opening of its new Abu Dhabi showroom on the Corniche.
In pictures: Upmarket living with Dh27m villa
at Saadiyat Island
Saadiyat Island is finally becoming the destination everyone hoped it would be. There is now a tranche of upmarket housing that boasts a wealth of amenities and luxury. Among them is a twelve-bathroomed, six-bedroomed, bastion of good taste to tantalise the well heeled among you.
Sony launches Xperia Z2 as it hopes to climb smartphone leaderboard
The struggling Japanese technology manufacturer recently sold off its Vaio laptop business to focus more on the mobile market. It is now launching a new flagship phone every six months to keep up with new technologies.
Rates report: Latest on UAE loans, accounts and credit cards
Souqamal.com brings you the latest interest rates on banking products in the UAE.