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