Exploration of 4 Pre-Salt Blocks Will Generate R$1 Trillion Over the Next 30 Years

Government Forecasts Raising R$1 Trillion in 30 Years with the Exploration of Four Pre-Salt Blocks. According to Minister Bento Albuquerque, of Mines and Energy, the proposal is to share up to 70% with states

The government estimates that it will be possible to raise R$ 1 trillion over the next 30 years with the exploration of four oil blocks in the pre-salt that are part of the mega auction in October. The funds, which will come from the collection of royalties (compensation paid by companies that explore oil) and taxes, will flow into the coffers of the Union, states, and municipalities. “It’s R$ 1 trillion in 30 years of collection at the three levels. That’s money and it has a multiplying effect,” said Albuquerque.

The largest portion of the money raised from the pre-salt, which also includes the share belonging to the Union from the oil explored, will go to the federal government. However, Minister of Economy Paulo Guedes aims to make a more generous distribution of the amounts. The promise is to share up to 70% of the value obtained. The economic team already knows that, in order to divide the oil resources with states and municipalities, it will be necessary to amend the Constitution to create a new exception to the spending cap rule, which limits federal expenditures.

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First, the government will receive the auction signing bonus, which will reach R$ 106 billion, paid by the companies that win the bidding. This money will also be shared with regional governments. Then, the exploration of the blocks will follow. It is at this point that the royalty money begins to flow into the governments’ coffers. The government will also keep a portion of the produced oil to sell it later.

Albuquerque noted that the operation will be possible thanks to an agreement made between the Union and Petrobras to review the so-called onerous assignment contract — an agreement under which the state-owned company acquired the right to explore 5 billion barrels of oil from the pre-salt. The terms of the contract were revised after a long negotiation, and Petrobras won the right to be reimbursed by the Union in R$ 33.6 billion.

Clearing the way for the government to sell the surplus oil that exists in these fields. The auction is scheduled for October 28 in Rio.

– Every year we delay the auction, according to very conservative estimates, we lose US$ 6 billion in investments, in platforms, in opportunities – said the minister, recalling that the oil from the onerous assignment is already ready to be explored.

According to Albuquerque, other countries also have very large reserves that will enter the global market in the coming years, which could compete with Brazilian fields.

Albuquerque also defended the possibility of conducting the auction and signing the agreement with Petrobras without Congress’s approval. The President of the Chamber, Rodrigo Maia (DEM-RJ), has insisted that the final say on the agreement belongs to the parliamentarians. But the minister has a different view.

He explained that the sharing of resources from the pre-salt could even be subject to analysis by Congress, but not the review of the onerous assignment. – There is a discussion, which has been going on for some time, regarding where the money goes. This is a fiscal issue (that doesn’t necessarily) relate to the auction of the onerous assignment – he added.

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