Following several years of negotiations about a contentious oil contract, Brazil has now agreed to pay a settlement of USD 9 billion to Petrobras, reports Bloomberg.
The settlement entails that Brazil will be able to hold an auction selling access to the region's remaining oil reserves for which Petrobras had otherwise purchased exclusive exploration and extraction rights in 2010. This took place under the a Transfer of Rights agreement, abbreviated TOR.
The field's initial yield prognosis for was for 5 billion barrels of crude, but when Petrobras began extracting in 2013, the TOR area showed signs of containing much more than originally expected. And due to a large debt, Petrobras lacked the means to fully exploit the field and continue exploration, the media reports.
Brazil's government thus wished to sell the remaining volume so the crude could be extracted. That, however, required Petrobras' exclusive rights be annulled.
The settlement will now allow Brazil to auction off the TOR area's remaining oil, which could contain more than 15 billion bbl.
The settlement will be fully paid in one installment and is expected to be finalized after Oct. 28, when the country holds its auction.
English Edit: Daniel Frank Christensen
(This article is from our sister media, ShippingWatch)