Petrobras Stands to Gain

Petrobras to Benefit from New Exploration Model in Brazilian Pre-Salt Area

Some months ago, the Brazilian government set up a commission to discuss the matter and propose a new exploration model for the pre-salt area, where the giant field of Tupi is located.

During the first half of 2009, all manner of strange proposition was reported in the Brazilian papers, creating some problems for Petrobras (PBR - Analyst Report) among investors. At this point, it seems that we are close to some definition and that the oddest ideas were left behind in discussions.

Yesterday, sources of the above-mentioned commission said that Petrobras will be treated as a preferential partner by the Brazilian Government. This means that Petrobras will have some advantages over other international players in the exploration of the giant field in the pre-salt area.

Among those advantages was mentioned that Petrobras could be chosen to explore some field without auctions, which would be mandatory for other companies. This preferential treatment may be not fair, but it is positive for Petrobras.

Considering that it is widely expected that Brazil will implement the partition agreement, which is common worldwide and that Petrobras will have a preferential treatment in this process, we reinforce our positive view on the Brazilian oil giant.