UPDATE 2-Brazil mulls oil law change for future contracts

Thu Apr 17, 2008 4:32pm EDT
(Adds reserves estimates, Petrobras CEO comment)
RIO DE JANEIRO, April 17 (Reuters) - Brazil is mulling changes to its set of rules for oil exploration and production, eyeing more taxes, but any shift would apply only to future contracts, Mines and Energy Minister Edison Lobao said on Thursday.
"Concessions can be brought up to date, improved, but we don't want to change the rules of the game already under way. It will be for future (concessions)," Lobao told reporters.
"The government has to have better conditions in the sharing of natural resources," Lobao said, adding that any changes required time as they had to be well-prepared.
Brazil has been seeking to raise the government take in oil concessions after finding big reserves of oil and gas in the subsalt cluster. This is part of a growing global trend of so-called resource nationalism spurred by high oil prices.
Latin America's biggest country has been more moderate than some neighbors like Venezuela, which nationalized the oil sector. Still, Brazil did withdraw subsalt blocks from last year's annual concessions auction, in an apparent move to keep the most prolific areas out of foreign hands.
Asked about a potentially huge subsalt project, which unlike most others is not operated by Brazilian state-run oil company Petrobras (PETR4.SA: Quote, Profile, Research)(PBR.N: Quote, Profile, Research) and is run by U.S. firms Exxon Mobil Corp (XOM.N: Quote, Profile, Research) and Hess Corp (HES.N: Quote, Profile, Research), Lobao said no changes in the set of rules were considered there.
"We have no concerns with the foreign partners, we only want them to follow the existing rules. If they discover more oil, we will be only happy," Lobao said during a news conference at Petrobras.
The BMS-22 block is part of a large subsalt formation known as Sugar Loaf. Earlier this week the head of the National Petroleum Agency, Haroldo Lima, said the Carioca find, which is part of Sugar Loaf, could contain up to 33 billion barrels of oil equivalent.
Analysts said later Lima apparently referred to the whole of Sugar Loaf and there was no hard new data to back up the estimate apart from very preliminary projections based mostly on seismic data.
Petrobras Chief Executive Jose Sergio Gabrielli , reiterated on Thursday that more drilling was needed in the area to establish the reservoir volumes.
"We are in the (exploration) process. We don't have the conditions to confirm volumes there," Gabrielli said.
Still, analysts remain bullish on Brazil's oil potential, expecting the country to become a major world oil province with big reserves of light oil in the subsalt cluster.
Last November, Petrobras estimated recoverable reserves at its subsalt Tupi find, not far from the Sugar Loaf structure, at between 5 billion and 8 billion barrels. Its total oil reserves in Brazil, not including Tupi, are around 12 billion barrels. (Reporting by Denise Luna and Andrei Khalip, editing by Matthew Lewis)