Lula Calls on Brazilians to Help Win Approval of New Oil Rules

Brazilian President Luiz Inacio Lula da Silva today called on Brazilians to help him win approval of new oil regulations to grant the government greater control over deep-water oil fields.

In a nationwide radio and television broadcast, Lula said the government’s proposal for new oil rules will guarantee most of the income from the so-called pre-salt oil remains in the hands of Brazilians. The rules also mean oil revenue must be spent on education, science, technology, culture, the environment and anti-poverty programs, the president said.

“Write to your deputy, your senator, so they support what’s best for Brazil,” Lula said in a speech to celebrate Brazil’s independence tomorrow, according to a transcript distributed beforehand of his address. “Political passion is part of our democratic universe, but we can’t let minor concerns delay our march toward the future.”

Lula is trying to speed up passage of new laws to manage reserves in a region that comprises the Tupi field, the largest oil find since Mexico’s Cantarell in 1976. The rules guarantee state-controlled oil company Petroleo Brasileiro SA at least a 30 percent stake in all joint ventures set up to bid for licenses.

“Brazil can’t be a mere crude-oil exporter,” said Lula, 63. “We’re going to add value here, exporting derivatives, such as gasoline, diesel and petrochemical products, which are worth much more.”

Job Creation

The government’s proposal, which was sent to congress last week, included a formal parliamentary request that legislators pass the new oil regulations within three months. Opposition parties are demanding that the government retract the request, said Gustavo Fruet, a deputy from the biggest opposition party, the Social Democratic Party, last week.

Brazil plans to create an oil industry with its own equipment and services, generating “thousands and thousands” of jobs, Lula said.

Revenue from the pre-salt fields will be placed into a so- called social fund to help fight poverty and improve education, he said.

The pre-salt region runs 800 kilometers (500 miles) along the Brazilian coast and has oil deposits beneath a layer of salt resting as deep as 3,000 meters (9,843 feet) beneath the ocean surface and another 5,000 meters below the seabed.

Lula said last week that the proven oil reserves of Petrobras, as the Rio de Janeiro-based, state-controlled oil company is known, may double in the next two years as the Tupi, Iara and Whales Park fields, whose licenses have already been granted, probably hold about 14 billion barrels of crude.

The new rules won’t affect previously auctioned oil-field contracts, Brazilian Energy Minister Edison Lobao said on Aug. 31.