The position of juniors in Brazil’s oil E&P sector will not be limited by new regulations being developed in the country, Helder Queiroz, an energy specialist at Rio de Janeiro Federal University (UFRJ), told BNamericas.

“Brazil’s oil potential is still far from being totally explored, both in the post and pre-salt regions,” he said. “There will be an increasing demand for majors and juniors to work on it.”

According to Queiroz, oil juniors will tend to concentrate in mature areas mainly in the post-salt layer, while federal energy group Petrobras (NYSE: PBR) will prioritize the pre-salt cluster.

“But juniors will also be able to take part in pre-salt E&P. The old format for the oil sector in Brazil, with foreign companies partnering with Petrobras, is not going anywhere,” he said.

Brazilian lawmakers will vote this year on the country’s new proposed E&P framework for the pre-salt cluster.

Under the proposed new production sharing system all oil output will belong to the federal government and participating companies will receive a fixed share of the revenues.

Under Brazil’s current concession regime produced oil belongs to the company that holds the license for a certain area. The company then sells the oil, keeps the proceeds and pays the federal government through taxes and royalties.

Petrobras will be the operator of all blocks that have not yet been awarded within the pre-salt cluster and strategic areas with a minimum 30% stake, according to the new framework.

Some junior oil firms have said they are receiving mixed messages from Brazilian authorities as they eagerly await a possible round for marginal, onshore acreage in Brazil.

“I think there have been mixed messages from Brazil. Clearly, they have a very exciting opportunity in the pre-salt areas. They are mesmerized by that and it has a huge potential for the country,” Gary Leach, the executive director of the small explorers and producers association of Canada (SEPAC), told BNamericas last month.

“I think it’s taken their eyes off sending out a consistent message about their desire to attract some smaller foreign companies to onshore opportunities,” he added. “There have been two steps forward and then one step back, especially in terms of what kind of onshore blocks that could be put up for bid.”

The complete interview with Queiroz will be published in this week’s Oil & Gas Perspectives, for subscribers only.

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