By Gram Slattery and Carolina Mandl

RIO DE JANEIRO/SAO PAULO (Reuters) – A consortium of Brazil’s 3R Petroleum and Norway-linked DBO Energy is in bilateral talks with Brazil’s Petrobras to purchase a cluster of offshore natural gas fields, according to two sources with direct knowledge of the matter.

The Peroa cluster, located off the coast of Espirito Santo state, would be among the first all-gas offshore fields sold by Petrobras amid a larger push to break the company’s near-monopoly in Brazil’s natural gas value chain.

Petroleo Brasileiro SA , as the state-controlled firm is formally known, has long dominated most segments of the Brazilian natural gas sector. But in recent years, it has begun selling off pipelines and assets in transport and distribution, in a move the company and the government hope will spur competition.

Several international firms already produce significant amounts of natural gas in Brazil, as they operate oilfields where so-called associated gas is removed during the production process. Much of that gas is simply reinjected into the ground, however, and few are producing at standalone gas fields.

Petrobras and 3R did not respond to a request for comment. DBO declined to comment.

In 2019, the Peroa cluster produced just short of 1 million cubic meters of gas per day, though it produced several times that amount in recent years. The cluster also includes the Malombe prospect, discovered in 2011, which studies indicate could produce up to 2.5 million cubic meters daily if developed.

Due in part to Peroa’s mature profile, it is expected to be sold for a relatively low price compared with other production assets being offered by Petrobras in the area, said the sources, who requested anonymity due to the confidentiality of the matter.

Rio de Janeiro-based DBO is composed of Brazilian and Norwegian executives,

Petroleo Brasileiro S.A. or Petrobras PBR recently informed that it will be taking over TOTAL’s TOT operatorship and its stakes in the five exploration blocks located in the Foz do Amazonas Basin, 120 kilometers offshore Brazil as the latter is resigning from its role of an operator of these blocks. These exploration blocks are usually referenced as FZA-M-57, FZA-M-86, FZA-M-88, FZA-M-125 and FZA-M-127.

This investment is in sync with Petrobras’ portfolio management process, which mainly focuses on boosting its shareholder value and prioritizing its investments in world-class assets in deep and ultra-deep waters.

The five blocks in the Foz do Amazonas Basin were acquired by a group of three companies during National Agency of Petroleum’s 11th Block Bidding round.The consortium comprised TOTAL with 40% interest alongside Petrobras and BP plc BP with 30% stakes each.

TOTAL did not reveal the reason behind exiting its operatorship of the blocks located in the environmentally-sensitive basin. However, Petrobras, TOTAL and BP put a lot of effort into acquiring a license to carry out drilling activities in the basin as the Brazilian regulators considered such operations to pose a threat to the reefs and the local biodiversity.

Management stated that this agreement will enable Petrobras to expand its ownership of the fields to at least 50%, which may further increase to 70% if BP does not wish to extend its stakes in the fields. The conclusion of the negotiation is thus contingent upon the consent of the Organs regulatory bodies.

Company Profile

Petrobras is the largest integrated energy firm in Brazil and one of the biggest in Latin America. The company’s activities include exploration, exploitation and production of oil from reservoir wells, shale and other rocks. The operations also include refining, processing, trading and transportation of oil and oil products, natural gas and other