The revision of a massive exploration contract between Brazil’s government and Petrobras will be based on the price of oil at the end of 2014, likely leaving the state-run oil company with a credit, the oil and gas regulator ANP said on Tuesday.

The agreement giving Petroleo Brasileiro SA, as the company is officially known, the rights to produce 5 billion barrels of oil in a huge subsalt area in the hands of the government in exchange for Petrobras shares was struck in 2010 when oil was priced at more than $100 a barrel.

Brent oil closed 2014 at $57.33 per barrel, making the rights to 5 billion barrels of oil and gas in the so-called Transfer of Rights Areas in the Santos Basin south of Rio de Janeiro far less valuable.

Petrobras received the rights as part of a more than $70 billion stock swap in 2010. The contract requires the renegotiation of the price of the rights and decisions over who will develop additional resources found in the area.

ANP’s general director, Magda Chambriard, told reporters on Tuesday that the oil price at the end of 2014 will be the reference for the revision, which signals that Petrobras could receive a credit after the revision.

“All indications are for the company to be a creditor. We only have to check the amount,” she said after an event in Rio.

Petrobras has the largest debt loads in the global oil industry, hovering around $125 billion. Its management is conducting an aggressive divestment program aimed to lower debt and raise cash for investments.

Source: www.reuters.com