Pre-Salt - The new Oil Regulation in Brazil - Manhattan Connection Show


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Transcript:
The teacher and lawyer, Claudio Pinho is pro Pre-Salt.
When it comes to the matter of oil,
he navigates in deep waters.
And he'd just released his book, "Pre-Salt".
Today he's joining us to spice up
this complicated matter. Welcome, Claudio.
It's a pleasure to have you here.
-The pleasure is mine. -Now, to those...
Those unaware and shallow people, like us...
Pre-Salt is a delusion, curse or salvation?
No... Pre-Salt...
It has great chances of becoming a great reality.
Nowadays... We've got... Our expectations on Pre-Salt,
the same way we did
when we found out about Campos' Basin.
Brazil wasn't only importer and refiner,
efectivelly becoming a big deal producer.
And today it's self-sufficient, right?
Do you think that Pre-Salt
will turn us into one of the greatest exporters?
This is one of the hopes of the foreign companies.
The biggest question that
the foreign petroil explorer companies are asking is:
"Since Brazil will export petroil,
can we take it abroad?"
That's their question.
Because of that... Just to formulate the question.
Pre-Salt is part of the greatest political project
of Lula's govern and, this way, Dilma's as well.
This nationalist inclination is a good or bad thing
for Brazil, concerning the market?
And since the foreing companies will
be willing to adjust themselves to this project?
Look... I've been hearing, even...
Chatting with this field workers, abroad...
The things it that they're not
specifically worried with the regulatory model.
Not even the part of having to be a part of it
along with Petrobras in a 30% market reservation.
Their worry is knowing the following:
The company who explores the bloc,
the ones who are in the partnership,
will be able to export petroil? Having any privilege?
To be honest, the legislation says
that it'll be a national political definition for us.
For us, in Brazil, who study this subject...
The great doubt is if in the market reservation,
Petrobras, and also PPSA,
which means a Pre-Sál Petróleo S.A.,
a company created by the govern,
will then hold an area's monopoly.
And Petrobras will find itself obliged to have 30%
of any exploratory concession.
The great question is if this is conditionally possible.
Is there a diference concerning
the candidates Dilma's and Serra's take on this matter?
Yes... What we noticed is that,
not trying to turn this into a politics matter, but it already is, right?
It's that... Concerning...
Who wins and who loses is the National Petroil Agency.
I think that Serra has already said
that he won't back down
in the new regulatory framework,
this is a reality, the project as it's based.
But, the National Petroil Agency,
it loses it's power with the Pre-Salt rule,
because, it'll be even more direct,
between PPSA, which is a state owned public,
and the explorating concession.
The NPA will only have a fiscalization role.
But this is the difference between past
and present, not so much between the candidates' projects.
Sure... This is the difference between past and present.
-The regulatory framework... -Between Pre and Post Pre-Salt.
And, truth be told, they'll coehxist,
since the regulatory framework of Law 9478,
says that the right to explore,
concerns only the Pre-Salt area.
But the Pre-Salt area indicates only
that there's a turn back to the monopoly situation,
for example, the Law, it regulates
in land exploration.
And Pre-Salt wouldn't be in land.
It means that tomorrow or later,
and area can be declared as an estrategic one
and return to the govern's hands.
Let Diogo join the conversation.
Continuing Caio's question,
concerning the political exploration concerning the Pre-Salt.
When the British Petroleum accident happened,
Lula said that this would never happen in here,
because Petrobras is far more capable
than British and Americans. All I know is that
that's wrong. The same companies
that dug British Petroleum's leaking hole,
Transocean, Halliburton...
They participate in Brazil’s exploratory projects.
These are the same companies that hold the technology.
It doesn't belong to Petrobras.
It's an international technology,
which is bought by Petrobras.
That's how it works, right?
Yes... But... There are...
Situations that can be predicted.
So, saying that it'll never happen in Pre-Salt...
-It's like... -Saying never,
it's almost always to be wrong, right?
Exactly. What we can remember, historically,
is the Exxon Valdez's accident.
When it happened,
an independent comission was created.
And this comission made a report
with 59 special recommendations.
Recomendations concerning technology, the environment...
To be observed.
It wasn't a legislation, they were recommendations...
And... When BP's accident happened...
The... The...
The legal representant of the Exxon Valdez's comission,
was called to integrate BP's independent comission.
He's professor Zygmunt Plater,
from Boston College. And he observed the following:
"From the 59 recommnedations we did, none was observed."
So, if you ask me, in the Brazillian case, what's missing?
We miss a worry in the legislation,
concerning the environmental aspect.
How can I give an environment licence nowadays,
concerning a matter that doesn't exist yet?
It's tricky...
We have to... Research the environmental legislation,
to be able to focus more.
Claudio, we're living now...
A great acceleration...
Concerning energy sources. I'd like to ask...
If... If...
Let's say, there's a solution in a short time.
In a year, next year.
How long more do we have to depend on petroil?
Well... Official estimatives,
say that it'd last for more 40/60 years.
But each day we discover another source of oil.
Each day, the technology improves.
Including, in Pre-Salt's case, its confirmation,
it occured over the last 3 years.
When oddly developed,
the technique used to study aftershocks.
So... Whatever may be the alternative,
oil will always be on the center of the energetic array,
for a long time, just for you to know,
in USA, how precious it's to them
from New Orleans and the surroundings...
The question was: "Should we stop exploring oil?"
And the answer was "no".
So, we have to be careful.
Even if we are willing to invest
in an energy, or a clean alternative source.
What's questioned is the exploration cost
of Pré-Sal's oil.
Here in Europe, all we can hear is about shale gas,
because it's so cheap,
and also an abounding source, they found new reserves...
Even in Europe. In Germany, Poland...
In Ukraine... There's gas everywhere in here.
So, they won't have any geopolitics matters
regarding this kind of energy's exploration.
And it can become a much cheaper source
than Pré-Sal's oil.
So, what's questioned is the exploration cost of Pré-Sal's oil.
In regars to costs,
there has been many studies, in estimative level...
Let's just say, not that reliable
as a real quantitative. Well, what is known
is that a platform, if it isn't getting
at least 1 point in perforation, at least 30.000 barrels/day,
it's not paying for itself.
Nowadays, technology is doing that, this oil price variable,
either it pushes you towards new sources,
which would be pricier today, or, in some way,
it makes you, for example,
think of shale gas and other sources
that are usable under this cost.
This price balance against cost
against which will be the economic policy,
is exactly the current equation.
There's no way of predicting where this is going.
This has always been truth, we never knew
among the technological developments
outside the oil industry, neither inside;
which will effectively reduce more costs.
Just like Diogo says: "It's a different technology."
For example, shale gas
and another 20 sources have been discussed,
it's imagined that they'll get cheaper over time.
And Pré-Sal's exploration, also.
What I think is important is sharing, this is the concept:
"Oil is necessarily evil.
And the other alternative sources are necessarily good."
I guess this is not the current equation, which means,
oil is necessary, the affluence is currently necessary.
So, let's create a legislation and regulation,
in a way that it's economically viable,
for example, to control
the offshore exploration.
In USA, the oil companies pay for
the entire surveillance’s cost.
I can't imagine IBAMA or the prosecutors,
hopping on a helicopter and going to a platform
on Campos' Basin,
for a surprise surveillance visit.
That's a concern we should have.
The other one is about the funds.
In the United State, sorry, in the United States,
there's the Oil Spill Liability Trust Fund.
Which is the fund created for environmental contingencies.
This discussion in here misses the point.
Claudio, thank you very much, it was a pleasure.
-Next... -Lucas, before this,
just to show Claudio's book.
For those who want to learn more,
here is his book "Pré-Sal". Back to you, Lucas.
Thank you. But as I was saying...