Brazil Passes Bill Dividing TOR Proceeds

By Maria Carolina Marcello
Tuesday, October 15, 2019

Brazil's Senate unanimously approved the main text of a bill on Tuesday night that clears the way for what may be a record-setting offshore oil rights auction in the Latin American oil powerhouse.

The bill regulates how proceeds from the blockbuster "transfer of rights" oil auction scheduled for Nov. 6 will be divided among municipalities and states in Brazil.

While senators will still vote on possible amendments, the passage of the main text effectively gives the legislative go-ahead to the bidding round, in which the government expects to bring some 106.5 billion reais ($25.5 billion) into state coffers.

The division between state and city governments was also seen as a key condition for final approval this month of the government's proposed pension reform in the Senate, a measure seen as vital for shoring up Brazil's public finances.

The proposed bill determines that out of the total proceeds collected in the oil auction, the amount the government owes to state-run oil firm Petroleo Brasileiro SA will be discounted according to the revised "transfer of rights" agreement.

Of the remaining proceeds, 67% will be passed on to the government, 15% to the states and 3% to the producing state, which in this case is Rio de Janeiro.

"The bill is not ideal for each state, but the best one for all," said senator Omar Aziz, the bill's rapporteur and president of the Senate committee, citing a political consensus to uphold rules determined by the lower house of parliament.

($1 = 4.18 reais)

(Reporting by Marcela Ayres; Writing by Gabriela Mello and Gram Slattery; Editing by Alexander Smith and Kenneth Maxwell)

Categories: Production South America Regulations

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