Brazil Govt Allies Seek To Remove Urgency On Oil Sector Bills

Brazilian government allies in congress will seek to remove urgency status for a series of bills on proposed major oil sector regulatory changes, party leaders said Wednesday.

At the urging of fellow members of the Democratic Movement Party, lower house speaker Michel Temer said he would speak with Brazilian President Luiz Inacio Lula da Silva Wednesday afternoon to convince the government to remove the urgency status.

The movement came after members of opposition parties Tuesday said they would obstruct voting on all measures before congress until urgency was eliminated.

With urgency status, congress’s two houses would each have only 45 days to vote on the four bills in the proposed overhaul.

Following much fanfare, the government Monday submitted the bills to congress with the aim of adapting oil sector regulation to the recent discovery of large offshore oil reserves in a subsalt geological layer off the country’s Southeastern coast.

Among other objectives, the bills would create a new state-controlled offshore oil management company denominated “Petrosal,” reinforce an offshore exploration monopoly held by existing state oil company Petrobras (PBR), and create a social welfare fund to administer revenues from future oil sector development.

President Lula initially agreed that the bills could be debated without urgency status, but backtracked on that pledge at the last minute at the request of members of his governing Workers’s Party and other allies in the governing coalition.

The subsalt oil fields were first unveiled in late 2007 and have been estimated by the government to hold recoverable reserves of up to 14 billion barrels of oil equivalent, or BOE. If confirmed, they would represent the largest oil find in the Western Hemisphere in more than 30 years.

The government’s proposed model for development of the fields, however, has come under dispute amid disagreement over exploration and production rules in the new oil blocks and over distribution of royalties among Brazilian states.