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Brazil’s Petrobras has announced interest in exercising its pre-emption right to participate in the auction for surplus oil from the Transfer of Rights (TOR) area.

The company seeks to exercise the right in the Búzios and Itapu areas under development, with a 30% participating interest.

Furthermore, the firm noted that it will explore the opportunity to increase its holding in these two areas on the day of the auction.

Petrobras could receive a signing bonus of R$20.98bn ($5.19bn) at the auction. Participation is also likely to participate in auctions in further areas, although the bidding terms will be the same as those offered to other bidders.

The proposed auction is expected to take place in October 2019 and the government hopes to attract major global companies with an opportunity to rake in around $26bn, reported Reuters.

The TOR area is a 2,800km² zone located off the coast of southeastern Brazil. It is believed to host a large amount of oil beneath a layer of salt under the ocean floor, according to Reuters.

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By GlobalData

In April, the government reached a settlement with Petrobras over a contract dispute pertaining to the TOR area, agreeing to pay a compensation of $9bn for a 2010 contract review.

The settlement comes after years of negotiations between the sides and set the stage for an auction to tap around six billion to 15 billion barrels of recoverable oil in the area above the five billion granted to Petrobras in the 2010 contract, Reuters reported.