Brazil to set rules in November for exploiting oil

Tue Oct 28, 2008 3:51pm EDT
SAO PAULO, Oct 28 (Reuters) - Brazil's government should define rules by the end of November for exploiting the country's recently discovered subsalt oil reserves, President Luiz Inacio Lula da Silva's chief of staff said on Tuesday.
"Today it's a case of working out what will be for companies and what will be for the government," said Dilma Rousseff at an industrial event in the capital city Brasilia.
The subsalt oil was discovered by national energy giant Petrobras (PETR4.SA: Quote, Profile, Research, Stock Buzz)(PBR.N: Quote, Profile, Research, Stock Buzz) in 2007 and could turn the Latin American country into a major global oil producer if reserves, below ultra-deep coastal waters, are as large as hoped.
Rousseff said the subsalt reserves carried a low risk for exploration, which would imply a larger "participation of the (state) in the oil."
In two wells alone, Petrobras discovered between 8 billion and 12 billion barrels of oil equivalent (oil and natural gas), which would already double national reserves.
Analysts say subsalt oil could total as much as 80 billion barrels, which could catapult Brazil into the ranks of the top 10 oil producers.
The government has mulled the idea of creating a second state oil company to manage the new subsalt fields but has not yet announced a decision on this.
(Reporting by Isabel Versiani; Translated by Peter Murphy; Editing by David Gregorio)