BRASILIA Dec 17 A Supreme Court injunction
blocking an attempt by Congress to overturn a presidential veto
added flames on Monday to a political battle raging over
Brazil's new oil royalty law that redistributes the country's
future oil wealth.
The feud between oil producing states reluctant to share
their income from oil royalties and the rest of the country
threatens to prolong regulatory uncertainty that has delayed
development of Brazil's massive pre-salt oil deposits offshore.
President Dilma Rousseff last month signed a new law that
increases the distribution of oil royalties from future
contracts to all Brazilian states, but she vetoed provisions
that affected existing concessions.
States that do not produce oil have a majority in Congress,
and they scheduled a fast-track vote for Tuesday evening to
overturn Rousseff's veto in a joint session of both chambers.
But an injunction sought by producing states, led by Rio de
Janeiro, was issued by Supreme Court Justice Luiz Fux, in effect
blocking Tuesday's vote.
Senate president Jose Sarney said he would appeal against
Fux's decision, arguing that the high court judge was
interfering with internal procedures of Congress.
The law is crucial for Brazil's oil industry because
auctions for new oil concessions have been on hold until a new
royalty framework is decided. The concessions are necessary for
Brazil to develop new discoveries as quickly as possible,
especially at a time when state-run oil company Petrobras
, a mandatory partner in the big new fields, is
struggling to meet existing production targets.
Rio's government said the original law vetoed by Rousseff
would have cut $39 billion of its royalties by 2020, including
crucial revenue needed to host the World Cup soccer tournament
in 2014 and the Summer Olympics two years later.