RIO DE JANEIRO, Sept 20 (Reuters) - Brazil's governmentplans to finance state-run oil company Petroleo Brasileiro SA'sparticipation in the Oct. 21 auction of Libra, country'slargest-ever oil discovery, the Estado de S. Paulo dailynewspaper reported on Saturday.
The government is also considering other measures to helpcash-strapped Petrobras, as the company is known, payfor the large investments it is required to make in Libra undera 2010 Brazilian oil law, Estado reported citing an unnamedgovernment source.
These measures include the raising of Brazilian fuel prices,reduction of dividends on the government's shareholding inPetrobras and changes to the terms of a 2010 oil-for-stock swap,Estado said.
Petrobras Chief Executive Officer Maria das Graças Fostersaid this week that Petrobras has the capacity to explore andproduce 100 percent of the oil from Libra, but does not have thefinancial capacity to cover the investments needed to developthe area, Estado said.
Under the oil law, Petrobras will have to come up with 4.5billion 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 billionreal up-front fee winners will pay Brazil for the rights toLibra. The winning bidder will be the company or group thatgives Brazil's government the biggest share of Libra's futureoutput to sell on its own account.
Under the law, Petrobras must take a minimum 30 percentstake in the winning group and lead exploration and developmentin the area as the group's operator.
Petrobras must also supply at least 30 percent of theestimated 400 billion reais ($180 billion) over 35 years thatthe government believes will be needed to develop the area.Libra, Brazil's largest-ever oil discovery, has an estimated 8billion to 12 billion barrels of oil, enough to supply worldneeds for three to five months.
Decreasing output from older offshore oil fields, delays inbringing on new areas, and government refusal to let the companycharge Brazilians world prices for gasoline, diesel fuel andcooking gas has crimped revenue and forced the company to borrowmore 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'slargest corporate spending program, does not include spendingfor Libra.
On Thursday, the government said the Libra auction attractedonly a quarter of the interest expected after many large,wealthy oil companies with experience in the region declined tosign up for the sale.
With Exxon Mobil Corp, BP Plc, BG Group Plc, Chevron Corp and other investor-owned oilcompanies choosing to stay away, Asian state-owned companies,such as India's Oil & National Gas Corp Ltd,Malaysia's Petroliam Nasional, or Petronas, andChina's CNOOC Ltd, dominate the list of 11 companiesthat agreed to pay the 2.05 million real ($931,818) registrationfee.
Magda Chambriard, head of Brazilian petroleum regulator ANP,said on Thursday that she had expected "more than 40" companiesto bid for Libra.
Petrobras officials were not immediately available forcomment. Brazilian government officials at the PresidentialPalace and Energy Ministries were not immediately available forcomment.
