Petrobras BS-400 gas find confirms E&P expansion plans

Tuesday, May 17, 2005

Brazil's federal energy company Petrobras (NYSE: PBR) has registered a new gas find in the BS-400 block in the southern Santos basin, company domestic exploration and production general manager José Marcusso told reporters on Tuesday.

The find reaffirms the company's bet on increasing light crude and gas production in this and other basins.

The new find, reportedly called the Cedro field, is close to the shallow water Mexilhão field in the same block and has yet to be appraised. Mexilhão holds reserves of 419 billion cubic meters (Bm3).

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The company has registered several finds including light crude in block BS-500, also in the Santos basin, in 2004 and this year, but reserve volumes are still being appraised, Marcusso said.

"We need at least until the end of the year to know the size of these reserves," he added.

Petrobras is currently developing Mexilhão production, which could be carried out through partnership with Spanish oil company Repsol YPF (NYSE: REP) to meet government guidelines bringing forward production to 2007 or 2008 from the previous target date of 2009. Mines and energy minister Dilma Rousseff said recently that production there could be some 17.4 million cubic meters a day (Mm3/d).

Although Petrobras is currently concentrating on developing production in the Campos basin, the company is already preparing to develop Santos for its gas and the state of Espírito Santo for the light crude and natural gas found there.

"We are too concentrated on the Campos basin," said Marcusso. "New productive provinces will arise starting with the Espírito Santo basin, which we know better and is at a more advanced exploration stage compared to Santos."

Espírito Santo state currently produces 38,000b/d oil and some 1.4Mm3/d of gas, Marcusso said.

In five years the state could produce more than 500,000b/d of oil, including some production from Parque das Baleias in the northern Campos basin, and 8-10Mm3/d gas.

Light crude production is being developed in the Golfinho field, which should start production with the start of a 23,000b/d production unit in August before being replaced in mid-2006 by the 100,000b/d Capixaba FPSO (floating production, storage and offloading vessel). The Capixaba lease has already been signed, he added.

By the start of 2007, a second unit, the 100,000b/d FPSO Golfinho II, should also start production in the same field.

Natural gas output from the Espírito Santo basin will also come from the Cangoá-Peroá field operated by Anglo-Dutch oil company Shell in which Petrobras has a 35% interest.