PETROBRAS: Regulator Overestimated 'transfer Of Rights' Area Oil Surplus

(RTTNews) - The Brazilian government overestimated the oil surplus available at the so-called "transfer of rights" area, where Petrobras has the right to extract 5 billion oil barrels, the company said in a statement.

Determining the size of the reserves is the first step for both the oil company and the Brazilian government to solve a financial dispute regarding the "transfer of rights" deal.

The "transfer of rights" is a system that has given Petrobras the right to explore and produce up to 5 billion barrels of oil and gas in the Brazilian pre-salt layer in exchange for a company reimbursement to the federal government.

Contract values, however, are being revised, as oil prices fell from almost US$ 100 to about US$ 50 a barrel since the signing of the agreement. Petrobras argues that the government should pay the company to make up for the difference.

Analysts say that one way the Brazilian government could solve the dispute would be to pay Petrobras with extra oil from the "transfer of rights" area. However, the government is currently fighting against one of its worst fiscal deficits in history and might also be interested in auctioning the surplus oil reserves.

The Brazilian oil market regulator (ANP) published on Friday estimates for the oil surplus in the "transfer of rights" area. The data, compiled by Gaffney, Cline e Associates, says that there is a 90% chance of the field holding 6.068 billion barrels of oil equivalent (boe). That comes on top of the 5 billion boe already assigned to Petrobras.

The company, however, said in a statement that "based on the great data volume" it has on the "transfer of rights" area, it built a separate set of surplus estimates with "lower statistical limits" than those published by ANP.

The oil company added that "the existence of oil surpluses in the transfer of rights area is an opportunity to both government and company to achieve a deal" and that it will publish a report from DeGolyer and MacNaughton on that matter in approximately 30 days.