Amidst an ongoing blockade, a…
The European Union's push for…
The Brazilian Senate has approved an agreement for the transfer of rights over a disputed group of oil fields that would see state energy giant Petrobras get US$9 billion in compensation.
Reuters reports the agreement also involves payouts to oil-producing states. These will come from the expected proceeds from auctions of the fields as well as from the surplus reserves of these fields. States will get 3 percent of the surplus reserves as well as portions of a 15-percent share of the auction proceeds, which the government has estimated at U$35 billion.
It was the surplus reserves at the offshore fields, all in the pre-salt zone, that sparked the dispute. The so-called transfer-of-rights area was assigned by the government to Petrobras back in 2010 to extract 5 billion barrels of oil and gas based on the oil prices at the time. The complex provisions of the contract, however, included a review of the costs in the area after it was declared commercially viable in 2014.
The state oil firm explored the area and found that a lot more oil lies in this low-risk offshore zone. There are estimates that the transfer-of-rights area could hold up to 15 billion barrels of oil in excess of the 5 billion barrels to which Petrobras was entitled to produce when the government transferred the area to the state firm in 2010.
Earlier this year, Petrobras said in a regulatory filing that it expected to get up to US$14 billion in compensation after the dispute was settled. The compensation it will actually get is significantly lower, but it would also be party to the development of the blocks.
These, by the way, are scheduled to be auctioned next month. Participants will need to pay up a combined signing bonus of almost US$27 billion for the four offshore blocks,
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.