Brazilian governor seeks Supreme Court halt of sixth oil, gas licensing round

Aug. 11, 2004
Roberto Requião, governor of Brazil's southern state of Santa Catarina and Conservative Party member, on Aug. 9 filed a lawsuit asking Brazil's Supreme Court to impede the National Petroleum Agency's (ANP) sixth licensing round slated for Aug.17-18. Multinationals fear political fallout from the situation.

Peter Howard Wertheim
OGJ correspondent

RIO DE JANEIRO, Aug.11 -- Roberto Requião, governor of Brazil's southern state of Santa Catarina and Conservative Party member, on Aug. 9 filed a lawsuit asking Brazil's Supreme Court to impede the National Petroleum Agency's (ANP) sixth licensing round slated for Aug.17-18. Multinationals fear political fallout from the situation.

Requião's suit argues that the round is unconstitutional because it makes the last petroleum provinces in Brazil available to multinational oil companies that could export all petroleum discovered, leaving nothing in Brazil but taxes for the operations.

"The requirements of the international oil market will lead the oil companies to give priority to foreign markets at the expense of Brazilian consumers," Requião told the local press.

"In 2006, Brazil will become oil self-sufficient through Petroleo Brasileiro SA (Petrobras), Brazil's state-owned company, and private companies should not be allowed to export oil," argued Requião.

Through his legal action the governor is requesting that the court revoke ANP's right to authorize oil exports, saying: "The constitution recognizes oil as a strategic asset of the nation."

ANP declined to comment.

According to ANP, 28 companies have presented documentation to enable them to participate in the round, and 24 paid participation fees and were granted access to data and information packages on basins of interest to them. ANP will offer 913 blocks, distributed in 12 sedimentary basins—619 offshore and 294 onshore—representing nearly 250,000 sq. km of acreage (OGJ Online, July 12, 2004).

Names of companies allowed to participate in the round will be announced this week, said ANP.

Legal experts consulted by OGJ said that they see little chance of the court suspending the licensing round but added that the political fallout caused by the governor's suit could incline some multinational companies to shy away from bidding.

"After all, the governor is also a member of the coalition that supports the present center-left government," said analysts, and companies may fear that the legal framework for the licensing round may be challenged again, even after the round is concluded.

An executive of an oil multinational, who requested anonymity, also told OGJ that some private companies fear that the winning bidders could face future court challenges to their concessions.

"The most astounding thing is that this court action is being put forward by a conservative governor and member of a party that helped set up the ANP in 1997, when the oil market was opened to private competition and who now is going against the government of which his party is also a member," said executives and analysts consulted by OGJ.