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The Brazilian Federal Audit Court has given the go-ahead to an oil action that covers acreage in the notorious presalt zone offshore Brazil that was subject to a prolonged transfer-of-rights dispute between Petrobras and the Brazilian government.
Reuters reports that the government expects the auction to generate almost $26 billion (106 billion reias) from the auction, which will take place on November 6.
Last month, the Brazilian Senate approved a $9-billion payout to Petrobras for the transfer of rights over the offshore area, which put an end to the dispute. Initially, there were reports that Petrobras could get as much as $14 billion from the government to settle the dispute, but eventually the sum was lowered to $9 billion.
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.
Given the already hot reputation of the presalt zone, interest in the TOR area is likely to be strong. The presalt zone is estimated to contain billions of barrels of crude oil, of which between 6 and 15 billion are in the TOR area. If developed, it could turn Brazil into the world’s fifth largest producer of crude oil and double its total oil reserves to 30 billion barrels.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.