The Brazilian Senate approved legislation June 10 aiming to regulate Brazil's future oil wealth from the offshore pre-salt Tupi oil fields. The first bill allows Brazil's main energy firm Petroleo Brasileiro (Petrobras), which is 51 percent state-owned, to capitalize a $200 billion to $220 billion investment plan to develop the pre-salt fields by having the government transfer $5 billion worth of pre-salt oil reserves to Petrobras in exchange for shares in the company. This gives Petrobras a monopoly over pre-salt production while increasing state control over the company. The second piece of legislation establishes a model for production-sharing agreements for new projects in the offshore region that would give Petrobras a 30 percent minimum stake in each agreement. The legislation also allows for the creation of a social fund, which would allocate funds from pre-salt oil development to state-led social programs. The most contentious piece of legislation is a bill on the redistribution of oil revenues to spread Brazil's incoming oil wealth more equally among states. The government of Brazilian President Luiz Inacio Lula da Silva — who is against the bill and does not want his veto to undermine the popularity of his preferred successor, Dilma Rousseff, in the northeastern states that would benefit from such a redistribution — intended to postpone a vote on the bill until after the general elections in October 2010. A number of Brazilian senators, however, feel that they can attract more votes in the upcoming election by promising increased oil revenues for their states. As a result, Brazilian Sen. Pedro Simon submitted an amendment to the social fund legislation that would redistribute oil revenues in the country and draw down the amount of revenue collected by the major oil-producing states, Rio de Janeiro and Espirito Santo, which together account for 90 percent of the country's oil production. But this amendment also contains a key caveat: The losses incurred by the oil-producing states would be reimbursed with the federal government's share in oil royalties — a point that is unlikely to sit well with the current government. Since the original text of the bill was modified with the insertion of the oil revenue distribution amendment, it will have to go back to the lower house for another vote (the date of which is yet to be determined). Da Silva likely will ratify Petrobras' investment plan and the creation of the social fund, but he is very likely to veto the oil redistribution amendment and attempt to delay the debate until after the October elections.