RIO DE JANEIRO, Sept 20 Brazil's government
plans to finance state-run oil company Petroleo Brasileiro SA's
participation in the Oct. 21 auction of Libra, country's
largest-ever oil discovery, the Estado de S. Paulo daily
newspaper reported on Saturday.
The government is also considering other measures to help
cash-strapped Petrobras, as the company is known, pay
for the large investments it is required to make in Libra under
a 2010 Brazilian oil law, Estado reported citing an unnamed
These measures include the raising of Brazilian fuel prices,
reduction of dividends on the government's shareholding in
Petrobras and changes to the terms of a 2010 oil-for-stock swap,
Petrobras Chief Executive Officer Maria das Graças Foster
said this week that Petrobras has the capacity to explore and
produce 100 percent of the oil from Libra, but does not have the
financial capacity to cover the investments needed to develop
the area, Estado said.
Under the oil law, Petrobras will have to come up with 4.5
billion reais no matter which of 11 companies signed up for the
auction win the offshore area, the paper said.
The payment is Petrobras' minimum share of the 15 billion
real up-front fee winners will pay Brazil for the rights to
Libra. The winning bidder will be the company or group that
gives Brazil's government the biggest share of Libra's future
output to sell on its own account.
Under the law, Petrobras must take a minimum 30 percent
stake in the winning group and lead exploration and development
in the area as the group's operator.
Petrobras must also supply at least 30 percent of the
estimated 400 billion reais ($180 billion) over 35 years that
the government believes will be needed to develop the area.
Libra, Brazil's largest-ever oil discovery, has an estimated 8
billion to 12 billion barrels of oil, enough to supply world
needs for three to five months.
Decreasing output from older offshore oil fields, delays in
bringing on new areas, and government refusal to let the company
charge Brazilians world prices for gasoline, diesel fuel and
cooking gas has crimped revenue and forced the company to borrow
more to pay for investments.
The Rio de Janeiro-based company is also in the middle of a
$235 billion five-year expansion plan. That plan, the world's
largest corporate spending program, does not include spending
On Thursday, the government said the Libra auction attracted
only a quarter of the interest expected after many large,
wealthy oil companies with experience in the region declined to
sign up for the sale.
With Exxon Mobil Corp, BP Plc, BG Group Plc
, Chevron Corp and other investor-owned oil
companies choosing to stay away, Asian state-owned companies,
such as India's Oil & National Gas Corp Ltd,
Malaysia's Petroliam Nasional, or Petronas, and
China's CNOOC Ltd, dominate the list of 11 companies
that agreed to pay the 2.05 million real ($931,818) registration
Magda Chambriard, head of Brazilian petroleum regulator ANP,
said on Thursday that she had expected "more than 40" companies
to bid for Libra.
Petrobras officials were not immediately available for
comment. Brazilian government officials at the Presidential
Palace and Energy Ministries were not immediately available for