Brazil could pay Petrobras up to $20 billion over rights: paper

[November 04, 2016]  SAO PAULO (Reuters) - State-run oil company Petrobras could receive as much as $20 billion from the Brazilian government as compensation for a fall in oil prices since the purchase of offshore drilling rights in 2010, newspaper Folha de S. Paulo said on Friday.

Petróleo Brasileiro SA, as the company is formally known, said in a securities filing that no decision had yet been made regarding a review of some of its oil and gas drilling prerogatives in the so called Transfer of Rights Area.

Petrobras paid the government $54 billion to purchase the rights in 2010 without competitive bidding. Terms of the sale included a renegotiation after five years.

The amount to be paid will be determined by independent experts hired by Petrobras and government regulatory agency ANP, Petrobras said in the filing.

Many analysts had been concerned that Petrobras would have to pay the government billions of dollars to hang on to the rights, which lie in Brazil's offshore subsalt region where vast deposits of oil and gas lie beneath a layer of salt.

However, Petrobras Chief Executive Pedro Parente told Reuters in late September he believed the government will end up owing Petrobras instead..

The reasoning is that price of oil has plunged since 2010, making the drilling rights area less valuable.

The government is the controlling shareholder in Petrobras.

Petrobras and the government expect to conclude the renegotiation by the end of the year, Folha said, citing unidentified sources.

The logo of Brazil's state-run Petrobras oil company is seen on a tank in Sao Caetano do Sul, Brazil, September 28, 2016. REUTERS/Paulo Whitaker

One government condition is that Petrobras use part of the money it receives to pay overdue taxes, Folha said. The newspaper added that the government could offer Petrobras rights to explore other offshore areas for a portion of the payment.

The Finance Ministry declined to comment on the report.

Petrobras, the world's most indebted oil company, accounts for about 10 percent of Brazil's economic output.

(Reporting by Bruno Federowski; Editing by Daniel Flynn and W Simon)

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