Larry Pascal in Latin American Law & Business on Latin American Energy Markets for 2011 − Brazil and Mexico

02/01/2011

This article begins a series providing an overview of developments in the energy sector in Latin America. In this article, we look at Brazil and Mexico. In future months we will look at Argentina, Bolivia, Peru, and Venezuela.

Brazil
Background on the Brazilian Oil Sector

Prior to 1995, the Brazilian Federal Constitution provided that the government was not allowed to assign or grant any type of participation in the exploration, production, refining, importation, exportation, and transportation of crude oil and natural gas. Under this old regime, only Petrobras, as the Brazilian national oil company, was authorized to perform these constitutionally protected activities. However, distribution and re-sale of oil by-products was not included as part of the Brazilian Government monopoly, and, therefore, could be carried out by private companies.

On November 10, 1995, the Brazilian Congress amended the Brazilian Federal Constitution to allow the Brazilian Government to contract with private and public companies headquartered in Brazil to carry out these previously restricted activities in accordance with a federal law to be enacted. Importantly, there were no nationality ertrictions as to these activities, provided the foreign investor forms a local entity. Almost two years later, the Brazilian Petroleum Law (“BPL”) was enacted.

Excerpted from Latin American Law & Business, February 2011. To read the full article, click on the PDF link below.

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