Brazil Moves To Free $120B Oil Investments Blocked By Oil Law

Brazil announces measures to extend the rights of Petrobras to operate some of its oldest fields and resolve a long-standing impasse.

RIO DE JANEIRO, March 9 (Reuters) - Brazil on Wednesday announced measures to extend the rights of state-run oil company Petrobras to operate some of its oldest fields and resolve a long-standing impasse on how to best share oil reserves that extend across areas owned by different groups.

Brazil's energy minister, Eduardo Braga, said after the measures were announced that they could help unlock as much as $120 billion of oil-field development by resolving the reserve-sharing, or "oilfield unitization," impasse caused by changes to Brazil's oil law in 2010.

The extension of the 27-year concessions owned by Petroleo Brasileiro SA, as Petrobras is formally known, would secure the financially troubled oil company's rights to key fields for a longer period.

That could make it easier to sell them to raise cash or assure investors it will have the output needed to make payments on $130 billion in debt, the largest in the oil industry.

Petrobras received the concessions in 1998 after it lost its Brazilian oil monopoly.

The measures, issued by Brazilian President Dilma Rousseff's energy policy council (CNPE), give oil regulator ANP authority to extend Petrobras' rights and 180 days to come up with proposed regulations for unitization.

The $120 billion figure cited by Braga comes from an calculation by Brazil's oil industry association, IBP, that if the unitization issue is resolved, it will allow the development of about 20 areas stalled by the 2010 law.

Such areas, in which oil fields extend beyond one concession into another, are owned by Petrobras, Royal Dutch Shell Plc and Galp Energia SGPS SA. They require about $120 billion of investment to develop, the IBP says.

The 2010 law increased government control of offshore discoveries in Brazil's Campos and Santos Basins, forcing complex unitizations between areas subject to different regulations, royalty and tax systems.

Other problems include the requirement that Petrobras lead and make minimum investments in areas governed by the new rules. Petrobras' financial troubles leave it with little money to enter auctions for new projects, though a bill in congress is trying to end those requirements.

If Petrobras had the money to invest in new areas it might force existing concession holders to transfer their operating rights to Petrobras, breaking existing contracts.

IBP officials were not immediately available to comment on the resolutions.

(Reporting by Jeb Blount; Editing by Steve Orlofsky)

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