OIL & GAS INDUSTRY IN BRAZIL: A BRIEF HISTORY AND LEGAL FRAMEWORK

Abstract

The recently announced discovery of potential large-scale reserves in the Brazilian so called pre-salt layer has resulted in a new legal framework for the country. In this new architecture, old and new regulation share the legal arena. Exploring this context, this paper provides an overview of the emergence and evolution of the oil and gas market in Brazil, and discusses the new legal configuration where the prevailing Concession System co-exists with the Production Sharing System and the Onerous Assignment. The conclusion pinpoints the challenges that the country faces in dealing with two energy sources –oil and gas— that will play an increasing role in Brazil’s future. It also indicates that the introduction of competition also has brought new features and improvements to oil and gas industry in Brazil. Structuring a robust legal framework that will foster the necessary investments is not only a challenge for the Brazilian economy, but also one that has to be tackled by many emergent economies with newly hydrocarbon discoveries.