* Sale could be under concession or production-share systems
* Petrobras won't face new oil-for-stock swap price until
* New oil-for-stock swap deal to come after viability
(Adds additional information about auction, auction types; adds
detail about Petrobras oil-for-stock swap areas)
By Rodrigo Viga Gaier
RIO DE JANEIRO, March 25 Brazil will hold its
next oil-rights auction by the middle of 2015, a top energy
official said on Tuesday, a move designed to give the government
more time to draw up sale rules.
It was not stated whether the auction would be an oil rights
concession auction or an auction of production-sharing rights,
Marco Antônio Martins Almeida, the petroleum secretary of
Brazil's energy ministry told reporters.
"Next year we will have an auction for sure, the first half
at the latest," he said.
On March 13, Magda Chambriard, the head of Brazil's oil
regulator, which runs all Brazilian oil auctions, said she was
taking a "conservative" stance toward oil rights auctions this
year, a comment taken to mean that the once annual sales would
not happen in 2014.
Brazil's state-owned oil company Petroleo Brasileiro SA
has also seen its ability to raise cash for auctions
and new exploration activity undermined by the government's
domestic fuel price controls and heavy spending to develop areas
it already owns.
Under Brazilian law, production sharing auctions are held
for Brazil's subsalt region, a giant offshore area where Brazil
already produces about 80 percent of its petroleum and has made
giant new discoveries since 2006. Winners are those groups that
offer the government the biggest share of oil after development
costs are covered. State-run oil company Petroleo Brasileiro SA
must take a minimum 30 percent stake in all
production sharing contracts and serve as operator.
Concession auctions apply to all other areas in Brazil.
Under the concessions any group can be operator and the winning
company or group owns all output after meeting minimum
exploration and national content rules and paying a royalty. If
the auction were held as a concession sale, it would be the 13th
since 1999. Auctions were suspended from 2008 to 2013.
The gap has led some foreign companies to scale back their
operations in the country.
PETROBRAS RENEGOTIATION DELAYED
Almeida also said that Petrobras will not have to sign until
next year a new contract for 5 billion barrels of offshore oil
and natural gas that it bought from Brazil's government in a
2010. The signing, he said will only happen after Petrobras
declares the areas holding the resources commercially viable.
Petrobras paid $42.5 billion, or $8.51 a barrel, for the
then minimally explored resources under an oil-for-stock swap
that was part of a September 2010 share sale. The sale, the
world's largest-ever stock offer, raised $70 billion for about a
third of Petrobras stock in a secondary issuance.
Under the resource purchase accord, Petrobras and the
government were expected to renegotiate the terms of the sale
this year. Since then the price of oil has risen more than 40
percent and the areas purchased are expected to contain more
resources than first expected, raising concerns that Petrobras
may have to pay the government more to keep them.
Petrobras' financial health, though, has deteriorated after
the 2010 stock sale and oil rights purchase. The entire company
is now worth $74 billion, only $4 billion more than the value of
the minority stake sold in 2010.
Paying more for the oil could add to cash and debt
difficulties caused by the government's control of domestic fuel
prices and a $221 billion expansion plan, the world's largest
Franca, an area that was part of the sale, is one of
Brazil's largest ever discoveries and contains far more oil than
originally expected, Almeida said.
Since the original contract was for only 5 billion barrels
and no more the bigger than expected volume, if proven, could
force further costs or contract negotiations on Petrobras.
(Reporting by Rodrigo Viga Gaier; Writing by Jeb Blount;
Editing by Jeffrey Benkoe and Sofina Mirza-Reid)