Brazil could increase its stake in Petrobras (PBR) if the company's capital were increased, according to the head of the country's oil regulator, the Estado News Agency reported Wednesday.

The government's stake in Petrobras could increase to "50% to 55%" from its current level of 32%, said Haroldo Lima, president of Brazil's oil regulator, the National Petroleum Agency, or ANP.

Lima said that, in order to raise Petrobras capital, the government had decided upon a means of authorizing the company to exploit an area of five billion barrels of oil in the sub-salt area in exchange for shares in the company.

"As a result, one perhaps could increase the federal government's stake in Petrobras," he said.

Brazil's sub-salt area has estimated reserves of between five and eight billion barrels of oil.

Lima pointed to Norway as an example of where the government has more than a 50% share in its state oil company, StatoilHydro A/S (STO).

The ANP president also said the fact that 60% of Petrobras shares are in private hands meant the government considered the company to be an inappropriate choice to represent it in consortia exploring sub-salt oil.

Lima said this was the reason why the group working on Brazil's new oil law decided to create a special company, Petro-sal, for the reserves.

The new company would have 100% state capital and would act as the "eye" of the government on consortia.

The role of Petro-sal, Lima said, would include checking that production costs presented by the consortia were correct, so that the state receives its just share of oil revenue.

The ANP president also said that Petrobras' guaranteed 30% stake in oil exploration in new areas referred to the part where consortia operated and not the whole sub-salt area.

In an auction where a consortium wins a bid offering 60% of oil to the state, then the 30% due to Petrobras would be levied on the 40% that the consortium has, Lima said.

-By John Kolodziejski, Dow Jones Newswires; 55-21-2586-6086; John.Kolodziejski@dowjones.com