BRAZIL
Black Gold
Brazil is rolling out the red carpet for global oil companies as they gather in Rio de Janeiro to bid on deep sea drilling rights, the goal being to stave off competition from Mexico as oil majors retreat from large-scale offshore projects.
Brazil offers high-cost, but prolific deep-water reserves, while Mexico’s lower-cost oilfields come with greater political risk, Reuters reported.
In a dramatic change from the days of high prices and resource nationalism, countries across Latin America are relaxing terms and accelerating auctions to lure back oil investment.
Brazil, for example, has scrapped a rule requiring state-owned Petrobras to operate deep-sea projects in the country’s pre-salt province, and loosened local content requirements on equipment and supplies. Mexico, too, has made the qualification process to bid in auctions easier and local content requirements more flexible.
However, Mexico’s looming presidential election in 2018 and deteriorating US-Mexico relation under President Donald Trump present some risks for investors – especially as Trump’s rhetoric has boosted leftist opposition firebrand Andres Manuel Lopez Obrador in opinion polls.
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