Petrobras Sets Up Minority Panel On Transfer of Rights Areas

Petrobras Sets Up Minority Panel On Transfer of Rights Areas
Petrobras board approves the creation of an independent committee to allow the state-controlled company's minority shareholders to review planned changes to some of its biggest oil and gas leases.

Reuters

RIO DE JANEIRO, Oct 24 (Reuters) - Brazil Petrobras on Monday said its board approved the creation of an independent committee to allow the state-controlled company's minority shareholders to review planned changes to some of its biggest oil and gas leases.

The Brazilian government and Petroleo Brasileiro SA, as Petrobras is formally known, are negotiating mandatory changes to a contract to exploit up to 5 billion barrels of offshore oil and gas in the so-called Transfer of Rights Areas in the nation's Santos Basin south of Rio de Janeiro.

Petrobras bought the rights, known in Portuguese as the "Cessão Onerosa," for more than $50 billion as part of a more than $70 billion stock sale in 2010. The contract requires renegotiation of the price of the rights and decisions over who will develop additional resources found in the areas since then and their value.

The committee was set up to assure non-government investors that talks between Petrobras and the government are conducted fairly and openly, the company said in a statement.

The move is Petrobras' latest effort to regain investors' confidence in the wake of a giant corruption scandal.

Besides the scandal, renegotiation has been delayed because of financial constraints placed on Petrobras because of its debt load, which at nearly $125 billion is the largest in the global oilindustry.

The Transfer of Rights Areas are located in the subsalt, a prolific offshore region where billions of barrels of oil and gas are trapped deep beneath the seabed by a layer of mineral salts.

Congress has approved the main text of a bill aimed at boosting private investment in Brazil's energy industry by allowing companies other than Petrobras to run new oil and gas projects in the subsalt region.

Petrobras had been expected to have to pay billions of dollars more for rights to the initial 5 billion barrels and much more for the right to exploit the additional discoveries.

In recent months, both Petrobras and the government have said the company may be entitled to a rebate from the government on the initial 5 billion barrels. The government has also said it may sell the additional rights to other companies as Petrobras is having trouble generating enough cash to develop its huge undeveloped resources.

The committee will include two independent board members, Guilherme Affonso Ferreira and Marcelo Mesquita de Siqueira Filho. An independent financial and technical expert will also be appointed, the statement said.

(Reporting by Anthony Boadle and Jeb Blount; Writing by Jeb Blount; Editing by Lisa Von Ahn)

Copyright 2016 Thomson Reuters. Click for Restrictions.

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