Tucano wants to open pre-salt oil reserves to private initiative.

Bahia 247 - Petrobras remains in the crosshairs of the opposition in Congress, and federal deputy Jutahy Magalhães Jr., from Bahia and a member of the PSDB party, has introduced a bill in the Chamber of Deputies to reopen the oil and gas market to private enterprise.

In practice, the proposal by the congressman revokes provisions of the regulatory framework created by the government in 2010, which replaced "a model then considered an absolute success," according to the congressman, giving way to a new exploration and production regime designed to accommodate the large pre-salt reserves, called production sharing, with a statist bias, which obliged Petrobras not only to be the sole operator of all pre-salt blocks but also to participate in all consortia to be formed with a minimum 30% stake.

Jutahy argues that the two new measures imposed by the current legal framework "are today the biggest obstacles to the rapid progress that exploration and production in the pre-salt layer demand, since Petrobras' financial situation is dramatic, totally different from when it was approved" four years ago, "notwithstanding warnings given at the time by the sector community that the price of a barrel of oil would not remain at around US$100/Brent for very long."

The parliamentarian points out that "the state-owned company's capitalization difficulties due to the appalling corruption cases, the unprecedented postponement of the release of the 2014 financial statements, and the downgrade in its ranking by Moody's – an international risk rating agency – which will create obstacles to obtaining loans with interest rates at the level normally practiced by the market, are a strong warning that it is necessary to make the legal adjustment now proposed, in order to allow Petrobras to regain credibility in the competitive international market, obtain resources at favorable interest rates and consequently optimize its budget and future investments."

The politician also points out that Law No. 9.478 of 1997, which opened the oil and natural gas market to private initiative and was repealed by the current framework, "allowed Petrobras to strengthen itself on a competitive basis, provided an exchange of experiences and technology with renowned oil companies on the world stage, and was responsible for the great leap in quality in this sector, which went from a production of 866 barrels/day in 1997 to 2,3 million barrels/day in 2014, a production that could have been higher had it not been for the stagnation of production between 2011 and 2013, notwithstanding the start of production from some pre-salt fields, now already in the range of 500 barrels/day."