Petrobras president defends end of pre-salt exploration sharing regime

August 21, 2019

For Roberto Castello Branco, regime does not stimulate the efficiency of companies

Petrobras President Roberto Castello Branco defended the end of the sharing regime that is mandatory for the exploration and production of oil in the pre-salt fields. According to Castello Branco, the regime does not encourage the pursuit of efficiency.

According to the executive, the so-called pre-salt polygon – an area defined by the government that encompasses the pre-salt fields between the Santos and Campos basins – should be eliminated, and let the government decide in which areas to apply the concession or sharing scheme.

– Definitely, we either change the pre-salt law, end the sharing, or in a more moderate move to end the pre-salt polygon and let the authority choose between the concession or the sharing regime. The sharing regime, as well as the local content, removes the incentive for efficiency, who decides what is best for the company is not its administration, but the rules set by bureaucrats. The sharing regime does not lead to efficiency – pointed out Castello Branco.

The president of Petrobras also criticized the local content policy, whereby oil companies in their projects are required to contract various percentages of materials and equipment in Brazil. According to the executive, the new direction of the National Petroleum Agency (ANP) – “more sensitive” – ​​improved the rules, which, however, still influence the oil companies in their business.

For Castello Branco, if the domestic industry is competitive, it does not need protection:

– If the local industry is good, it doesn’t need anything, it doesn’t have to force oil companies to demand their products. If it is not effective after 22 years of the Petroleum Law, it is time to end it because it is no good. If 22 years was not enough for companies to learn something, to be competitive, who did not prepare, patience. The oil industry cannot afford it.

Castello Branco once again stressed that the company is continuing its ongoing pursuit of cost savings considering that it still has a high debt of $ 101 billion, because the company was “robbed by a criminal organization”  referring to the corruption case that existed in the state-owned company revealed by Operation Car Wash.

In his quest to cut costs, Castello Branco cited a visit he made to Petrobras’ building in Vitória, Espírito Santo, last Monday. Petrobras is, according to him, in a luxurious, modern building, but which costs the company $ 176 million annually.

– It’s a beautiful, modern building, I was surprised. We have first-rate people working there, but it costs us $ 176 million a year. The building is in the most prized area of ​​Victoria, best technology, glass imported from Belgium and shutters that close automatically. But that weighs heavily on the cost of the company. Our ongoing pursuit is cost reduction, ”he said.

Source: O Globo

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