By Jeb Blount
Oct. 24 (Bloomberg) -- Exploration of new offshore oil fields in Brazil may be hindered for two years because the government is having trouble writing rules to govern the finds, Julio Bueno, Rio de Janeiro state's industry secretary, said.
``The political discussions will immobilize exploration in Brazil,'' Bueno, former head of BR Distribuidora, the fuels distribution arm of Petroleo Brasileiro SA, Brazil's state- controlled oil company, said in an interview in his office in Rio de Janeiro. ``I'm very cynical about anything getting done in the next two years.''
Exxon Mobil Corp., OGX Petroleo e Gas SA and other foreign and domestic oil companies are waiting to find out if they can take part in future oil-rights auctions. A review of the oilfield rules is two months late and may be further slowed by President Luiz Inacio Lula da Silva's looming ``lame-duck'' status ahead of elections in 2010, Bueno said.
Last November, the government removed blocks near the recently discovered Tupi field from auction and began studying whether Brazil needs a batch of more-restrictive rules governing foreign companies' participation.
Tupi, which may contain as many as 8 billion barrels, is the largest discovery in the Americas since 1976.
``They are only putting up the least attractive and most risky fields,'' Bueno said. ``We are having a debate that will go nowhere and can only hurt the Brazilian people.''
As industry secretary, Bueno tries to promote economic growth in the state of Rio de Janeiro, whose waters hold most of Brazil's oil.
The committee is likely to recommend that Brazil end its oil-lease auction system for the fields near Tupi, which may reduce investment by foreign and domestic oil companies, he said.
Lula has said that existing concession contracts held by companies such as Exxon, BG Group Plc, Repsol YPF SA, Hess Corp. and Galp Energia SGPS SA will be respected.
To contact the reporter on this story: Jeb Blount in Rio de Janeiro at jblount@bloomberg.net
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