Brazil’s lack of clear rules for the unitization of oilfields is delaying the development of as many as 10 billion barrels of oil and gas and about $120 billion of investment, Jorge Camargo, head of Brazil’s oil industry association, IBP, said on Monday. Unitization, the process of joining different or competing oil rights in an oilfield into a single unit, is required under Brazilian law.
But existing regulations have complicated or prevented unitization, stopping development in some areas, Camargo said in a conference call. Camargo, who met with Brazilian President Dilma Rousseff in Brasilia earlier on Monday, said he is optimistic she plans soon to fix the unitization rules and present a stimulus package for the industry, which is struggling with low prices and a corruption scandal at state-led oil company Petroleo Brasileiro SA.
“We were more animated when we left the meeting than when we went in,” said Camargo, who has increased the IBP’s criticism of government oil policy in recent months. “We are enthusiastic the industry will improve in a way to rebound even in a low-price scenario,” he added. “This will happen if certain legislative and regulatory steps are taken.”
Camargo also said Rousseff gave him the impression she plans to extend the Repetro special customs regime for the oil industry, which reduces the potential tax bill on the importation of equipment and construction of equipment in Brazil for oil exploration and production.
Earlier on Monday Energy Minister Eduard Braga said that the government was considering a variety of stimulus plans for the country’s oil industry but that it was not considering the use of tax exemptions or subsidies.