In December 2008, Brazilian National Agency of Petroleum, Natural Gas and Biofuels (ANP) held the 10th round of auctions for 130 onshore and offshore hydrocarbon blocks. Auctions were then postponed indefinitely. Motivated by the massive offshore pre-salt discoveries a few years earlier, Brasilia wanted to restructure the legal basis for continuing to tap into its oil riches in order to guarantee greater control and returns from the oil and natural gas fields before more auctions occurred. Many proposals passed, but the fate of the Ibsen proposal — a change to the law that would reduce the percentage of royalties given to oil- and natural gas-producing states and municipalities and spread the wealth more evenly among all of Brazil's states and municipalities — has not been decided. If the proposal, currently stalled in the National Congress, does not move forward before the July 15 parliamentary recess, the 11th round of hydrocarbon block auctions will be delayed again until 2013. The measure is very unpopular with hydrocarbon-rich states, particularly Rio de Janeiro (Brazil's main oil and natural gas producer), Espirito Santo and Sao Paulo, all three of which border the offshore pre-salt fields. The division of royalties paid by energy companies has shifted over the years as politicians have tried to negotiate more favorable rates, but one factor remains: The oil-producing regions are resisting a more egalitarian division of hydrocarbon royalties, even challenging the constitutionality of such a measure. Until the matter is settled, auctions on exploration rights for new hydrocarbon blocks will be delayed in order to avoid any judicial uncertainty regarding blocks conceded before and after the new division of royalties. This delay will hamper the expansion of Brazil's oil and natural gas production and will keep its goal of energy independence out of reach.
