Brazil's President has vetoed part of his country's new Oil Royalties Bill to avoid a potential court battle.
Following a mass protests in Rio de Janeiro, President Dilma Rousseff vetoed legislation which would have drastically affected oil revenue in three Brazilian states: Espirito Santo, Rio de Janeiro and Sao Paulo which produce most of Brazil's oil and natural gas.
No empty threat for Brazil's Congress Image: Akasped |
The bill, recently passed in the country's Congress, would have seen a redistribution of all oil royaltiies to benefit the other 24 Brazilian states.
While these states may have welcomed the news, the country's rapidly developing oil production sector could have been jeapordised by lengthy lawsuits issued by the aggrieved energy-producing states.
The President's veto amended the legislation to ensure the three energy-producing states will continue to receive royalties on the output from existing oil concessions. The President signed most of the rest of the bill, already passed by Congress, allowing the redistribution of royalties from all future concessions so that non-producing states will receive a greater share. The bill also mandates that future oil concession revenue is used to expand and improve Brazil's education system.
The country's main oil and gas reserves are located in large fields off Brazil's southeast coast in ultra-deepwater, where billions of barrels of oil are believed to be trapped beneath the salt layer. In September, Brazil announced polans to hold it's 11th auction for concessions in May 2013, dependent on the passage of the royalties bill.
Having sidestepped the potential lawsuits, the President has also addressed fears concerning delayed preparations for the 2014 World Cup and the 2016 Olympics, set to be held in Rio de Janeiro.