Brazil expects to renegotiate by year-end the price of 5 billion barrels (Bbbl) of oil and gas rights purchased by Petrobras in a 2010 stock-for-oil swap, an energy ministry official said on Aug. 31, removing a complication in the state-led company's plans to finance and develop major new offshore discoveries.
Petrobras bought the rights from Brazil's federal government to six areas in September 2010 for about $43 billion, or an average price of $8.51/bbl, a value considered high for unproduced and unconfirmed oil resources.
The purchase was part of sale of more than $70 billion in stock, at the time the biggest-ever sale of stock in history. The amount of 5 Bbbl is enough oil to supply the needs of the U.S., the world's largest consumer, for eight and a half months.
Jose Botelho, head of the E&P policy at the Energy Ministry, said at an event in Rio de Janeiro hosted by the IBP, Brazil's oil and gas industry association, that the ministry sees the negotiations being completed before the end of the year.
At the time of the stock-for-oil swap, the world's oil prices were about $80/bbl and heading higher. Now, six years later, they are below $50/bbl and recently sunk below $28/bbl, raising questions whether Petrobras can develop the resources profitably.
The government may allow Petrobras to pay in oil for any difference in the oil rights sale price, Botelho said, adding that the new deal and price might benefit Petrobras.
The government must also determine how to develop resources beyond the 5 Bbbl of oil and equivalent natural gas discovered in the areas Petrobras bought rights to, he added.
Among the options the government is considering is selling the rights to the additional oil to companies other than Petrobras, Botelho said.
Botelho also said the government expects a law to pass the lower house--by the end of September--that will end Petrobras' obligation to operate all new development in Brazil's so-called Subsalt Polygon and take a minimum 30% financial stake.
He added that the government is working on plans to reduce the amount of Brazilian goods and services they must purchase under oil exploration and development contracts, and that the government is also considering how to compensate companies in disputes over the amount of local goods and services that were used. (US$1 = 3.2281 Brazilian reais)
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