Regulatory News

President Dilma Rousseff’s decision to veto articles that would redistribute royalties from oil exploration in areas already tendered ended a political dispute that now could end up in court. Governors of all 20 states that do not have oil production in large scale are moving to pressure Senate President José Sarney, to put Dilma’s vetoes to a vote. If overturned, the states of Rio de Janeiro and Espirito Santo, the largest producers of oil, will go to court, which will delay new auctions for exploration blocks, scheduled for next year.

The federal government's concern is that there is a large majority of parliamentarians in favor of overturning the veto and enforce changes in current procurement rules. With this, there is a great risk of the case ending up in the Supreme Court. The postponement of new bids would entail immense damage to the entire oil industry, since the search for new fields would be interrupted.

© 2007 CRE Brazil - All Rights Reserved.