Oil companies are not boosting…
President Joe Biden is facing…
Brazil’s oil giant Petrobras could pocket US$14 billion from the government to settle a long-running dispute for a number of offshore oil fields that Petrobras has the rights to develop but not the financial means, Reuters reports citing a Petrobras regulatory filing.
The so-called transfer-of-rights area was assigned 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.
Both parties—the government and Petrobras—have claimed that they are owed billions of U.S. dollars, and the oil company has also disputed the estimates of the reserves in the area made by the country’s oil regulator, ANP.
The state oil firm has 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.
Related: Saudis Set Sights On $80 Oil
Now, Petrobras has indicated there is a good chance that they will find an end to the dispute and start looking for partners to develop these fields, but only after an audit court greenlights the settlement. Both the company and the government need to agree with the terms of the settlement for this to happen.
A separate Reuters report said Petrobras was already raising funds for the development of the transfer-of-rights area. The company will sell up to three issues of local unsecured debt to the tune of US$810 million (3 billion reias) that will be used in the development of the fields.
Brazil is already a hot spot for Big Oil companies because of its abundant oil and gas resources in the pre-salt zone. After the settlement of the transfer-of-rights dispute, it can become an even more attractive destination for Big Oil.
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.