Petrobras board member breaks ranks to slam government policies

Petrobras board member breaks ranks to slam government policies

San Francisco: A member of Petrobras’ board broke ranks and publicly criticised the Brazil national government’s energy policies on Tuesday.

Roberto Castello Branco, who was a presidential appointment to the board of the troubled state-run oil company, said the policies have been detrimental to Petrobras and how it does business.

He particularly singled out the local content requirement whereby oil companies are obliged to buy as much as 65 percent of their goods and services from domestic companies, saying it fosters the growth of cartels.

He also targeted the production-sharing system for new auctions of oil exploration rights in the offshore subsalt layer. This demands that the bid-winner shall be the one that offers the largest share of future output to the government.

Also Petrobras has been obliged to take a minimum 30% stake in all subsalt projects and serve as the only operator of an exploration or production area.

With the company reeling from a huge corruption scandal plus the effects of the slumping oil market, these conditions are too onerous on Petrobras, plus they have distorted the marketplace, according to Castello Branco, who is one of seven government representatives on the board.

A bill is in Brazil’s Senate which would open up subsalt development to overseas firms.

 

Donal Scully

With 28 years experience writing and editing for newspapers in the UK and Hong Kong, Donal is now based in California from where he covers the Americas for Splash as well as ensuring the site is loaded through the Western Hemisphere timezone.

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