Last week Brazil’s energy minister announced that international companies will be invited to bid for concessions in the pre-salt deep-water oil fields as early as next year. Brazil stopped selling concessions in the area soon after the size and importance of the discovery was recognized in 2007. Under a production-sharing system, the Brazilian government would own the oil but pay oil companies with part of the proceeds. Under the current system, companies buy concessions in an auction and own the rights to the oil they produce.
The announcement is a recognition that the task of developing the reserves trapped under kilometers of ocean, rock, and hard-to-drill salt would be too much for Brazil’s national oil company and that extensive international participation will be needed to exploit the oil.
The government’s new policy, which has yet to be ratified by the Congress, highlights the difference between Brazil and the Mexico-Venezuela-Bolivia model. These countries seek to have the international companies do the exploration, development and production