June 21, 2018 / 4:18 PM / 9 months ago

Brazil government eyes Nov 29 for choice pre-salt oil auction

RIO DE JANEIRO, June 21 (Reuters) - Brazil’s government is considering November 29 for a much-anticipated auction of choice oil blocks in the offshore Santos basin, although it must first resolve a long-running dispute with Petrobras SA over the cost of adjacent areas.

“The auction is pre-scheduled for November 29,” the Mining and Energy Ministry said on Twitter on Wednesday night, after the lower house of Brazil’s Congress approved the first draft of a law authorizing Petrobras to sell stakes in the area.

Petrobras declined to comment.

The choice reserves are part of the “transfer-of-rights” area that the government passed to Petrobras at a price that remains in dispute. Negotiations since 2014 to resolve the dispute have been contentious, as both parties have claimed to be owed billions of dollars.

Resolving the spat would allow the cash-strapped government, which is expected to be ousted in October elections, to raise extra revenue to close a huge budget gap by selling rights to billions of barrels of oil.

A new president would not take office until January.

Last month, Deputy Mining and Energy Minister Marcio Felix told Reuters the government and Petrobras were very close to resolving the dispute, while dismissing concerns a fuel price crisis presented an obstacle to talks.

He also said the government aims to hold an auction of the nearby areas in the second half of the year.

The area lies in Brazil’s pre-salt region, where billions of barrels of oil are buried under thousands of feet of salt beneath the ocean floor. (Reporting by Luciano Costa, Writing and additional reporting by Alexandra Alper; editing by Bill Berkrot)

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