The success of the giant LIBRA field auction was on a knife-edge today as union protests and tepid foreign interest continued to overshadow the $270bn project. Yet, although pessimism over Brazil reigns, some good old common sense looks to be leaking into Brazil's deepwater oil explorations.
Brazilian newspaper Folha runs a story today that Petrobras is actively seeking to rediscuss (by which it means 'get out of') the obligation to take a minimum 30% stake in any field that is auctioned. Plans to invest $263.5bn are unrealistic given a weak share price and more difficult background for debt fund raising mean. Petrobras just cannot take on yet more tasks - if anything, it needs to be doing far less.
It has long been clear that the sheer enormity of investments is overwhelming Petrobras whose share price has been as underwater as the pre-salt layer it would like to tap. The government, which is already struggling to push forward a myriad of transport projects that are proving less popular than hoped, may now be prepared to interpret rules more flexibly. That should allow a greater participation for non-domestic players. As always, though, if the government squeezes the pips too hard, foreign investors could prove as elusive as they are in the road sector.