Brazil Opts For Nationalized Oil Production

brazil party

Despite some concerns, it looks like Brazil is ready to nationalize its oil industry.

President Luiz In√°cio Lula da Silva has proposed bills that will keep the nation’s oil production, and wealth, in Brazil:

FT: The bills would introduce a “shared production” regime to replace the concessions-based system; create a state oil company, Petrosal, to manage the reserves; set up a fund to manage the government’s revenues from the reserves and direct them towards social spending on areas such as poverty relief, education and infrastructure; and allow a $50bn issue of new capital in Petrobras, the government-controlled but publicly traded oil ¬≠company.

Brazil has enough oil in the ground to turn from an oil importer to an oil exporter. The FT says estimates put it at 60-100 billion barrels of oil and natural gas equivalent. The oil is off the coast of Brazil, underneath layers of salt which are hard to drill into.

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