Brazil
During 1994, Brazil's national government began considering possible privatization plans in order
to generate badly needed investment capital. Revision of the constitutional prohibition of foreign
involvement in upstream oil and gas to allow foreign joint ventures with Petrobras, Brazil's state
oil company and the world's 21st-largest company in terms of oil production and the
eighth-largest refiner, also is being considered. However, full privatization of Petrobras, which is
chiefly owned by the federal and state governments of Brazil as well as by private enterprises and
individuals through local stock market shares, has been categorically rejected {see Endnote 67}. Nonetheless, some erosion of Petrobras' monopoly
may
be achieved by a proposal to the Brazilian congress
that would compel Petrobras to compete with private companies for new exploration areas,
leaving Petrobras with 3-year concessions to all known exploration areas and to any new
discoveries by Petrobras {see Endnote 68}.
Little foreign activity has ever occurred in Brazilian upstream petroleum. The only foreign
commercial discovery occurred during the 1970's and was made by the Shell Oil affiliate Pecten.
The discovery was an offshore natural gas field. Petrobras' substantial reserves and refining
capacity are a tempting target for potential buyers, but, until further efforts at privatization are
made, few opportunities exist for foreign companies in Brazil.
The most significant project currently underway in Brazil by a non-Latin American company is
Tenneco Gas's construction of the Brazilian part of the Bolivia-Brazil pipeline and some other
natural gas projects {see Endnote 69} . PDVSA and
Petrobras
also are negotiating a refinery joint venture {see Endnote 70}.