Good morning! We’re covering how Brazil’s massive oil auction flopped. The rise of extreme poverty in Brazil. And the trial of the year finally set for an end. (This newsletter is for platinum subscribers only. Become one now!)
Historic oil auction is a flop
The much-awaited “mega” oil auction held by the Brazilian government yesterday turned out to be a complete flop. Of the four pre-salt oil and gas fields on offer, only two received bids. Meanwhile, the biggest winner was state-owned company Petrobras, despite the government’s hope to attract massive foreign interest.
Why it matters. The Brazilian government had been banking on raising up to BRL 106 billion with the sale of these oil fields, which are rumored to be home to some 15 billion barrels of oil and gas. In the end, the sales only generated BRL 69.96 billion, of which over 90 percent came from Petrobras.
States and municipalities. While the federal government was hoping for a large influx of resources, state and municipal administrations were even more desperate for these funds. Negotiations in Congress established that 30 percent of auction proceeds would go to states and municipalities, who are desperate for money to pay for their...