Brazil's lower house of Congress on Wednesday approved an executive order allowing the government to auction its share of oil in uncontracted offshore pre-salt areas, a move that could help boost revenue as it struggles to balance its budget.
The government had submitted a separate bill on the matter, but its content was incorporated by lawmaker Jose Priante into an executive order regarding use of oil and gas revenues for certain spending programs.
The amended executive order, which will go to the Senate for final approval, expands the possible uses of those resources.
As Reuters first reported in April, the government prepared an additional oil auction this year to boost revenue, aiming to raise at least 20 billion reais ($3.60 billion) by selling small portions of the Tupi, Mero and Atapu pre-salt fields.
Blocks previously sold in these areas do not cover the full extent of the oil reserves. The remaining portions, known as uncontracted areas, are already producing oil under existing agreements. These surplus zones will now be put up for bid.
Lower House Speaker Hugo Motta confirmed on social media that the measure could generate 20 billion reais.
A person familiar with the matter said the green light for the executive order removes the need for a separate bill the government had submitted to authorize the auction.
However, the sale can only proceed after the National Energy Policy Council publishes a resolution and the official auction notice is released.
A second government source said the auction would establish minimum prices for each area, with the highest bidder securing extraction rights.
"Whoever wins gets to take all the oil in that area," the source said.
The executive order's approval followed a major setback for the government earlier in the day, when Congress overturned a presidential decree that had raised the financial transaction tax (IOF) on certain operations.
($1 = 5.5577 reais)
(Reuters - Reporting by Marcela Ayres; Editing by Kylie Madry)
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