Oct. 9 (Bloomberg) -- Petroleo Brasileiro SA, Brazil's state oil producer, is in talks with the Ecuadorian government on getting $250 million compensation for ceding an oil block, Gazeta Mercantil reported, citing an unidentified person at the company.

Petrobras has given up exploring Block 31, which may yield as many as 30,000 barrels a day, because it's located in an Amazon Indian reserve and could present the company with social and environmental problems, according to Gazeta. The transfer of the block and receipt of payment may take at least four months, the Brazilian newspaper said.

Petrobras is also in talks with Ecuador about remaining in Block 18, which already produces 32,000 barrels a day, Gazeta said.

To contact the reporter on this story: Joao Lima in Lisbon at jlima1@bloomberg.net

Last Updated: October 9, 2008 06:36 EDT