Grupo de Economia da Energia

Posts Tagged ‘sharing’

Prices, costs and new regulatory framework for oil

In oil on 25/04/2011 at 00:30

By Thales Viegas

The production sharing agreement, in Brazil, changes significantly the role of costs and prices in oil activity regulation. First, costs have become the decisive factor for determining the surplus oil to be shared. Second, the price of oil may not only be a reference to the monetization of oil for each agent involved, that is, the price which pays the oil purchased by agent. It can also influence the magnitude of the sharing, if the price is a variable in the calculation that defines the percentage of surplus for the government. In some countries, to share profit oil with the government depends upon the price of oil. That is, the higher the price of oil, the greater the government’s portion for the profit oil.

By deduction, the production sharing agreement may fix the involvement of government in production, but also can allow it to alternate according to contract items previously agreed. Given the centrality of price and cost variables, the following analyses attempt to explain the interdependent dynamics of these two items. Continue lendo »

Brazil: The Pre-salt and State control

In oil on 22/11/2010 at 00:34

By Ronaldo Bicalho

The ongoing changes in the institutional framework related to oil exploration in the Pre-salt includes an overview of the strategic role to be played by the Brazilian petroleum sector different from that one defined previously, both with respect to the newly global Brazilian insertion and supporting conditions of such insertion.

The core of this change is focused exactly on expansion of the State control over the exploitation of the Pre-salt resources, in order to achieve maximum benefits from such exploitation, under a long-term strategic perspective that transcends the boundaries of the oil industry.

Thus, changes related to the institutional framework of the Brazilian oil sector is not a merely discussion about the advantages and disadvantages of exploitation systems – concession agreement versus production sharing agreement -; advantages and disadvantages of Petrobras’ interest in all consortia; advantages and disadvantages of Transfer of Rights and Petrobras’ capitalization; advantages and disadvantages of establishing a new state-owned company; and so on. Continue lendo »