Brazil’s lower house approves 3rd of 4 oil bills

Brazil’s lower house of Congress has approved the third of four bills designed to overhaul the country’s oil legislation and give the government greater control over vast new offshore reserves.

Developing the new oil fields, which lie below a thick layer of salt rock deep beneath the ocean floor, will cost an estimated $400 billion and could make Brazil one of the world’s top 10 oil exporters.

The Chamber of Deputies approved a bill late on Tuesday that would create a fund to invest oil revenues in education, health, environment and other social and economic development projects.

The fund will receive all of the revenue the government will make from subsalt fields it tendered out until 2009 and some of the income on fields to be tendered later.

So far nearly one-third of the subsalt area has been tendered to oil companies. The fund would obtain 160 billion reais ($88 billion) over the lifetime of these fields, according to the Chamber of Deputies news agency.

The Chamber is expected to vote amendments to the bill later on Wednesday.

Last year it approved two separate bills. One would create a new state agency to administer the subsalt oil contracts. Another would change the existing concessions system to a production-sharing model, requiring that state-run oil company Petrobras operate and hold a minimum 30 percent stake in all new projects in the offshore subsalt province.

The lower house must now vote on a final proposal that would allocate new oil fields held by the state to Petrobras, boosting the company’s capital.

Once approved by the Chamber, all bills go to the Senate. If they are altered there they require a final vote in the Chamber.

If Congress fails to pass the bills by late May, the government proposal risks being sidelined by soccer’s World Cup tournament and campaigning before October 2010 general elections.