Brazil


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Brazil was the world's 12th-largest oil producer in 2011 and the second-largest in Latin America. Recent discoveries of vast offshore pre-salt oil resources have the potential to make Brazil the world's fifth-largest producer by 2020. The country also has proven natural gas reserves of 15 trillion cubic feet, and produced 850 billion cubic feet in 2011. It has a growing mining industry and is a major exporter of iron ore, aluminum, bauxite, and other industrial metals. While Brazil consumes all of its natural gas and most of its current oil production, the extractive industries still account for 30 percent of exports.


Brazil's Performance on the Resource Governance Index

Brazil earned a "satisfactory" score of 80, ranking 5th out of 58 countries. Excellent Safeguards & Quality Controls contrasted with a lower Enabling Environment score.

Rank
(out of 58)
Score
(out of 100)
5 Composite Score 80
8 Institutional & Legal Setting 81
Freedom of information law 100
Comprehensive sector legislation 100
EITI participation 0
Independent licensing process 83
Environmental and social impact assessments required 50
Clarity in revenue collection 100
Comprehensive public sector balance 100
SOC financial reports required 100
Fund rules defined in law N/A
Subnational transfer rules defined in law 100
9 Reporting Practices 78
Licensing process 100
Contracts 0
Environmental and social impact assessments 33
Exploration data 100
Production volumes 100
Production value 67
Primary sources of revenue 100
Secondary sources of revenue 67
Subsidies 0
Operating company names 100
Comprehensive SOC reports 100
SOC production data 86
SOC revenue data 100
SOC quasi fiscal activities 50
SOC board of directors 100
Fund rules N/A
Comprehensive fund reports N/A
Subnational transfer rules 100
Comprehensive subnational transfer reports 100
Subnational reporting of transfers 100
2 Safeguards & Quality Controls 96
Checks on licensing process 89
Checks on budgetary process 100
Quality of government reports 88
Government disclosure of conflicts of interest 100
Quality of SOC reports 83
SOC reports audited 100
SOC use of international accounting standards 100
SOC disclosure of conflicts of interest 100
Quality of fund reports N/A
Fund reports audited N/A
Government follows fund rules N/A
Checks on fund spending N/A
Fund disclosure of conflicts of interest N/A
Quality of subnational transfer reports 100
Government follows subnational transfer rules 100
9 Enabling Environment 66
Corruption (TI Corruption Perceptions Index & WGI control of corruption) 60
Open Budget (IBP Index) 91
Accountability & democracy (EIU Democracy Index & WGI voice and accountability) 68
Government effectiveness (WGI) 57
Rule of law (WGI) 55
Satisfactory Weak
Partial Failing
To explore all data and compare
scores, use the RGI Data Tool.

Institutional & Legal Setting (Rank: 8th/58, Score: 81/100) learn more

Brazil's "satisfactory" score of 81 reflects a comprehensive legal framework but also takes into account the lack of a thorough public consultation during the environmental impact assessment process.

In 2010, Brazil significantly modified its regulatory framework with the introduction of a fiscal regime based on production-sharing agreements for strategic areas such as the pre-salt offshore oil deposits. While onshore oil concessions are still awarded through an open and competitive bidding process, this new regime favors the Brazilian semi-national oil company, Petrobras.

Extractive companies make payments to the National Treasury, with royalties and government profits from offshore oil reserves deposited into a social fund. In May 2012, Brazil approved a new access to information law and pledged to increase public transparency as part of the Open Government Partnership project.

Reporting Practices (Rank: 9th/58, Score: 78/100) learn more

Brazil provides data on many important aspects of the extractive industries, but does not publish full contracts or information on subsidies, earning a "satisfactory" score of 78.

Details on the licensing process and the basic provisions of concession contracts are made public, and non-confidential portions of contracts are available from the ANP upon request for a fee. Environmental impact assessments are published.

The ANP is the source of the most detailed information on resource revenue. It regularly publishes information on reserves, production volumes, prices, exports, investment, the names of companies operating in the country, production data by company, and disaggregated revenue streams such as production values, royalties, special taxes, bonuses, and acreage fees. The Finance Ministry publishes limited information on resource revenues, while the Mines and Energy Ministry publishes annual reports with information on reserves, production volumes and values, prices, investments, royalties, and special taxes.

Safeguards & Quality Controls (Rank: 2nd/58, Score: 96/100) learn more

Comprehensive reporting and audit requirements, as well as checks on the budgetary process, earn Brazil a particularly "satisfactory" score of 96.

The legislature has no formal oversight role in the licensing process, but Congress can review the ANP's decisions on an ad hoc basis. All resource revenues are subject to internal controls and external validation by a national audit office, and the legislature scrutinizes audited reports of national accounts. Government officials with an oversight role in the hydrocarbon sector are required to disclose their financial interests in any extractive project.

Enabling Environment (Rank: 9th/58, Score: 66/100) learn more

Brazil performs well on rankings of budgetary openness, but scores relatively poorly on government effectiveness and the rule of law, contributing to a "partial" score of 66, Brazil's lowest on any RGI component.


State-Owned Companies (Rank: 3rd/45, Score: 92/100) learn more

The state owns 64 percent of Petrobas, which produces 92 percent of Brazil's oil. In 2010, Congress created a new national oil company, Pre-Sal Petroleo SA (PPSA), to represent the government in production-sharing agreements for the offshore pre-salt area, although Petrobas will conduct those oil operations. Petrobras regularly publishes extensive information on its oil operations and subsidiaries, including data on all revenue flows and tax payments; PPSA's reporting policies are not yet established.

Petrobras undergoes annual audits by both the national audit court and an independent external auditor. These reports are published, as is information on the composition and decision-making processes of the company's board of directors.

Natural Resource Funds learn more

Brazil's sovereign wealth fund receives revenues from resource exploitation and other sectors. In 2010 the government added a social fund to receive revenues directly from oil production in the pre-salt area. Managed by the president, the fund will be used to promote development projects. It is not yet operational.

Subnational Transfers (Rank: 1st/30, Score: 100/100) learn more

Brazilian law establishes how oil revenues are distributed between federal and subnational governments. The ANP and local governments regularly publish information on these transfers. It is not yet clear how revenues from the pre-salt area will be distributed.

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