Brazil could pay
Petrobras up to $20 billion over rights: paper
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[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.
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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.
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![](../images/110416pics/busine13.jpg)
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
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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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