Source: Brazil To Open Subsalt To Some Non-Petrobras Oil Operators

Reuters

RIO DE JANEIRO, May 10 (Reuters) - Brazil plans to publish rules allowing companies other than state-run Petrobras to operate some oil production-sharing contracts in offshore Subsalt Polygon blocks, a source participating in discussions of the rules told Reuters.

The rules will only allow non-Petrobras companies to operate in the Subsalt Polygon if the blocks are sold to unitize oil fields connected to existing areas, said the source. Those existing areas must already be leased under concession contracts signed before new production-sharing rules took effect

The source requested anonymity because no authorization to talk to the press had been given.

Under Brazilian law, if more than one company owns an oil field, they must negotiate an agreement to operate it as a single unit with a single operator, or lead partner, a process known as unitization.

Problems with this arose after Brazil changed industry rules in 2010, creating a system of production-sharing contracts for all new development in an area known as the Subsalt Polygon. The Subsalt Polygon is an offshore area near Rio de Janeiro where some of the world's largest recent oil and gas discoveries have been made.

Under these production-sharing contracts, Petroleo Brasileiro SA, as Petrobras is formally known, would serve as operator and hold a minimum 30 percent financial stake. Questions arose on how to unitize production-sharing fields with existing areas sold under a concession system.

The law apparently required that Petrobras becoming the lead partner in all unitizations between production-sharing and concession-contract fields. This angered many existing concession holders who felt it took away their right to freely negotiate unitization terms by automatically transferring control of how their asset would be developed to Petrobras.

The new rules will allow the existing concession holders to negotiate directly with Petrobras over who will operate the unitized blocks and let a non-Petrobras company run things if the parties agree, the source said.

Petrobras, the world's most indebted oil company, has little money to bid for new oil fields. A bill in Brazil's Congress aims to end the requirement that Petrobras act as operator and take the minimum stake in all Subsalt blocks.

If that bill is passed, it would render moot the new rules Brazil is expected to release in the coming days.

(Writing by Jeb Blount; Editing by James Dalgleish and Alistair Bell)

Copyright 2016 Thomson Reuters. Click for Restrictions.

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