Brazil government likely to pay Petrobras $10 billion in transfer-of-rights dispute: report By Reuters

RIO DE JANEIRO (Reuters) – The Brazilian government is likely to pay around $10 billion to state-run oil firm Petroleo Brasileiro SA to settle the so-called ‘transfer-of-rights’ dispute, newspaper Valor Economico reported on Tuesday, though the parties have not agreed on final terms.

The financial daily, citing a source with knowledge of the matter, said the payment was a reduction from a previous proposal of $14 billion. Valor in January had reported that the government had agreed on the higher figure, but the government subsequently denied the report.

The two sides are close to an agreement, the paper said, reiterating statements by public officials in recent weeks.

Petrobras, as the firm is widely known, did not respond to a request for comment. The economy ministry said that “the negotiations continue” and the final values “will be announced when they are agreed upon between parties.”

The transfer-of-rights dispute dates back to a 2010 deal between the government and Petrobras relating to a huge share offering that would have diluted the government’s stake.

To maintain control of the company, the government sold Petrobras the rights to explore 5 billion barrels of oil in an area off Brazil’s coast for 74.8 billion reais at the time. With that money, it bought additional Petrobras shares.

Brazil’s oil regulator now estimates there are around 17 billion barrels of recoverable oil in the area, and the government is seeking to auction rights for the exploration of the excess oil. First, the two sides need to resolve the dispute over the area, which will result in a significant payment to Petrobras.

On Friday, Economy Minister Paulo Guedes said – without specifying the currency – that Petrobras and the government had started off 60 billion apart in their negotiating positions, but were now only 2 billion apart. The figures likely refer to dollars, as the two sides at one point each believed they were owed $30 billion.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.