RIO DE JANEIRO (Reuters) - The Brazilian government concluded it owes state oil company Petrobras money after a revaluation of stakes in offshore oil blocks known as transfer of rights areas, a government source familiar with the issue told Reuters on Friday.
The government will offer to settle the debt arising from the transfer of rights contracts with Petrobras, or Petróleo Brasileiro SA (PETR4.SA), using a payment in oil, added the source, who asked not to be named because the contract revision is yet to be made public.
The source declined to say how much the government would have to pay Petrobras after the revision of the contract signed in 2010, through which the government exchanged exploratory rights over some oil areas on its coast for Petrobras equity.
“We will see how much Petrobras has to receive and we will cover that in barrels of oil, since the government has no means to pay that in cash,” the source said.
Brazil’s government is trying to reduce a chronic budget deficit that reached more than 150 billion reais in 2016.
The source said there was enough oil to make that payment, since some government calculations concluded there was around 5 billion barrels of additional recoverable oil in the Transfer of Rights areas.
Oil prices were much higher back in 2010 when the original contract was signed, at around $90 per barrel. The revaluation of the contract after a specific period was included in the deal.
Brazil’s oil and fuels regulator ANP said on Friday it had started to communicate to the government all the calculations it made regarding the revision of the contract.
Writing by Marcelo Teixeira; Editing by Daniel Flynn and Andrew Hay