The controversies surrounding the Libra auction.

Fate decreed that the first major oil field from Brazil's newly discovered pre-salt reserves would be named Libra, the zodiac sign represented by a scale, a universal symbol of justice and balance. Let us keep this in mind and, setting aside our defenses for a moment, objectively consider the results of the auction that took place this Monday, October 21st.

First, let's address the fundamental question: How much will Brazil and Brazilians gain from the exploration and sale of oil from the Libra Field? According to the Ministry of Mines and Energy (MME), Brazil will retain 85% of all revenue generated. This includes 75% in the form of taxes, royalties, and government oil revenue, with the remaining 10% going to Petrobras.

The MME calculation is done as follows:

1. Signing bonus, which should be R$ 15 billion, paid upon signing the contract;
2. Royalties to be paid by companies for oil and gas production, which, as already mentioned, should total R$ 270 billion;
3. Surplus oil due to the Union, which will be 41,65%, or approximately R$ 736 billion, and
4. Income tax to be paid by oil companies, corresponding to 34% of the profit they earn from this production.
5. So far, we have 75% of the income.
6. Petrobras will hold 40% of the consortium to be established. 40% of the 25% allocated to the companies corresponds to 10% of the total.
7. A total of 85% is allocated to Brazil.

Since Petrobras, although controlled by the State, is not solely owned by the State (which holds 48% of the company), it can be said that the percentage effectively allocated to public coffers should be between 75% and 80%. But let's be prudent and stick with the lower number, 75%.

Beyond this generous percentage, there are other factors that point to the advantages of the auction. This time, Brazil has developed a complex and intelligent legal framework to protect our wealth. The resources will be used, for the most part, in education and health. Petrobras will be the sole and exclusive operator. And 55% of the equipment used must be produced in Brazil.

Now let's address the political issue itself. The comparison some critics make to the privatization policies of the PSDB party is meaningless. Libra is not Petrobras. It's a mountain of oil hidden thousands of kilometers below the seabed, in ultra-deep waters of the Atlantic Ocean. The cost to explore Libra, according to official data, should exceed R$ 400 billion.

It's not true that Petrobras would "easily" raise this money. Our beloved state-owned company is already one of the most indebted non-financial companies on the planet. And the world isn't so "kind." There are other major projects competing for the available financial resources.

We need to consider the following. First, Petrobras is no longer entirely public. Although the government is in control, it only owns 48% of the shares. Therefore, handing over 100% of Libra to Petrobras would mean giving resources to private agents and financing everything with public money, since any external loan would have to be guaranteed by the National Treasury. The great advantage of the production-sharing model is that the Treasury will not need to contribute to exploration investments. In other words, the State will not need to reduce social spending to invest in the seabed.

The slogan “the oil is ours” and “it has to be ours” should not be confused with a foolish attachment to that smelly and toxic oil. The oil is ours, but not to drink it or bathe in it. It is ours to sell it and use the money for education. Period.

Of course, there's the issue of sovereignty and control of the surface. This was resolved with the creation of a 100% publicly owned state-owned company, PPSA, which will have control over all pre-salt exploration. Not to mention that the entire pre-salt area, and all the oil beneath it, remains the property of the Union. Brazil allows partner companies to help us explore the resource. To do this, they contribute money, financial and administrative engineering, and guarantee the purchase.

The criticism that China is interested in low prices is equally unfounded. Having an interest is one thing, being able to do so is another. The price of oil depends on a relationship between supply and demand on a global scale, and it will certainly take several more decades for it to lose value substantially until an alternative source becomes economically viable. In any case, oil is not only used as fuel. It is one of the most valuable and versatile products in industry. It is used in the manufacture of plastics, fertilizers, and thousands of other things. Even if humanity finds another source of energy, oil will remain valuable.

However, since Brazil is a major consumer of oil, very high prices are not in our interest – nor is the world's. The Brazilian economy does not revolve around oil, and even with the pre-salt reserves, the sector will not be hegemonic, due to Brazil's diversity, which is a very positive point.

Nationalist and developmentalist energies must be directed towards planning the production of equipment, services, and technologies for the pre-salt layer in a way that also benefits other sectors of Brazilian industry. There is much to build. This is definitely not a time for lamenting. It's a time for work!

Regardless, Libra will generate millions of jobs, inject billions of dollars into our economy, and allow us to take a technological leap. If we add these gains to the money that will be invested in education and health, there's no way to avoid seeing the Libra auction as an important milestone in the country's economic history.

- See more at: http://www.ocafezinho.com/2013/10/22/as-polemicas-em-torno-do-leilao-de-libra/#sthash.6tfK4wtw.dpuf