Brazil post-impeachment oil reforms lose steam: UpdateOREANDA-NEWS. September 01, 2016. A long-pending oil industry reform that the Brazilian congress was supposed to have approved after today?s impeachment of suspended president Dilma Rousseff has been postponed.

The lower congressional house had been expected to vote today on legislation that would allow companies other than state-controlled Petrobras to operate sub-salt fields. Lawmakers yesterday delayed the vote until after 12 September, a date that could further slip beyond municipal elections in October.

Under a 2010 Petroleum Law, Petrobras has an exclusive mandate to operate sub-salt fields with a minimum 30pc stake. The provision is seen as a drag on development of the country?s massive sub-salt reserves, and a change would boost participation in a planned sub-salt licensing round in 2017.

Former vice president Michel Temer temporarily assumed presidential duties in May when Rousseff was suspended for allegedly manipulating the federal budget to conceal the feeble state of the economy, an accusation she denies.

The Brazilian Senate is impeached her today in a final overwhelming vote of 61-20, ratifying Temer as president. She and her supporters say the impeachment amounts to a coup, a charge that has echoed abroad.

Up against staunch labor opposition and a fractious congress, Temer is walking a tightrope between delivering on oil reforms needed to help tackle a deep economic recession and maintaining a minimum level of popular support needed to legitimize his government.

The overwhelming congressional support for Rousseff?s ouster does not imply that Temer has a mandate to implement pension, labor and energy sector reforms. The October municipal elections threaten to push unpopular reforms to the back burner while lawmakers enter pre-election mode.

For some, the political compromises required to gain congressional support already put Temer and his financial team at a disadvantage. And with many congressmen dogged by allegations of corruption centered on Petrobras, Temer is hard-pressed to usher in urgent economic reforms.

The sole-operator rule change has widespread support from industry leaders, including Petrobras chief executive Pedro Parente, but the proposed reform has moved at a snail's pace since it was introduced in February 2015 by Temer's current foreign affairs minister, senator Jose Serra.

The bill was approved by the Senate in February, but got caught in the headwinds of congressional upheaval that forced a change in the leadership of the lower house.

Oil workers unions, a backbone of Rousseff?s long-serving Workers Party, strongly oppose stripping Petrobras of the sub-salt mandate and broader plans to downsize the company. They are persistently threatening to hold a nationwide strike.

The oil industry is also pushing for changes to rigid local content rules and clearer oil field unitization guidelines considered necessary to rejuvenate Brazil's oil and gas sector.

The congress has gotten behind Temer on other proposals, demonstrated by yesterday's lower house approval of legislation that lays the legal groundwork for the sale of some state assets.

The bill, which still requires Senate approval, also provides the framework for an infrastructure campaign the government hopes will ease record unemployment.