Petrobras keeps making news. In mid-April, a Petrobras official said the company’s new Carioca discovery may contain as much as 33 billion barrels of oil equivalent. The company quickly backed off of that claim, saying more work was needed. But even if the claim is off by an order of magnitude, it’s obvious that Brazil’s upstream sector is booming. The Carioca prospect follows the news of the Tupi field, which may hold up to 8 billion barrels of oil equivalent, and a similar find called Júpiter.

While these discoveries are good news for Brazil, they could prove to be both a blessing and a curse for upstream companies operating in the country. On the positive side, the discoveries suggest that the Santos Basin could become one of the world’s most productive basins, with plenty more mega finds on the horizon. But the renewed interest in Brazil could also make future opportunities there more expensive, as the federal government seeks to increase its take from the booming hydrocarbon sector.

Santos is home to Carioca, Tupi, and Júpiter. The three areas are in pre-salt, deepwater Santos layers that experts believe could host a number of new deposits. Given the huge potential at Santos, the government is mulling different ways to increase its take of the most promising oil and gas revenues. But since Brazil’s government is more business-friendly than its counterparts in Bolivia, Ecuador, and Venezuela, it will likely keep investors’ interests in mind when it implements changes.

Over the past few months, Brazilian regulators have suggested that they are considering increasing the government’s take of net oil and gas revenues on low-risk blocks beyond today’s 40 percent maximum. Others are proposing new concession models that would give the state up to 50 percent of net revenue. Either way, the changes would only apply to new contracts awarded in the country’s annual oil and gas licensing rounds.

Further, contract changes could give the government freedom to open up new pre-salt blocks to investors. Those blocks have been kept out of reach in recent rounds; in late 2006, courts forced the government to suspend a bidding round before some of the Santos blocks were put up for sale. (The courts have since agreed to let the round go forward, and those blocks will be awarded later this year.) In addition, the government pulled 41 Santos blocks from last year’s ninth licensing round, feeling it would get too little for promising areas close to Tupi. If the government agrees to increase its take on blocks, as many in Brasilia predict, then companies could have a chance this year to compete for some extremely promising – albeit more expensive – Santos blocks.