ANP: Brazil's Natural Gas Output Could Nearly Double by 2020

SAO PAULO - Brazil's natural gas output could nearly double by 2020, reaching up to 120 million cubic-meters a day, as Latin America's biggest country increases the number of offshore platforms to take advantage of huge deep-sea oil reserves, the general director of the National Petroleum Authority, or ANP, said Wednesday.

"Between 2016 and 2018, 21 new platforms will need to start producing," said ANP General Director Magda Chambriard at an energy seminar. "This is the basic premise." The platforms are part of a Brazilian drive to develop huge oil and gas fields in the so-called subsalt offshore region.

Ms. Chambriard said average natural gas production in Brazil in 2012 will likely be similar to the 2011 level of around 66 million cubic-meters a day. Growth this year was stymied, among other problems, by a reduction in the level of production in two large fields.

Ms. Chambriard noted forecasts are based on projects laid out by state-owned energy company Petrobras and other companies. She also noted around 90% of Brazil's gas production comes from fields operated by Petrobras.

According to Ms. Chambriard, the ANP is working toward holding the next auction for oil and gas concession rights in May, as previously announced. But she added the bidding round still depends on congressional approval for legislation dealing with royalties paid by drillers to state governments.

"For that to happen, a solution to the royalties issue will need to be reached at least 120 days before the auction," she said. "I believe there will a solution on royalties by January."

Brazil's government wants royalties to be paid more broadly to all of Brazil's 27 states. But states such as Rio de Janeiro and Espirito Santo that are getting the biggest stakes under the current system are trying to block the government bill in congress.

Ms. Chambriard commented briefly on a controversy between the Rio de Janeiro state government and a small private oil refinery in the state called Manguinhos.

The Rio state government moved on Tuesday to seize lands belonging to Manguinhos, according to a decree published in the Federal Register. The decree followed comments by Rio de Janeiro Governor Sergio Cabral, who said on Sunday the government would spend 200 million Brazilian reais ($99 million) to take over the refinery's lands, clean them up and build public housing at the site.

Governor Cabral said the expropriation order was justified because of large amounts of money owed by Manguinhos to the state in the form of unpaid taxes and penalties.

The refinery has the capacity to process about 15,000 barrels of crude oil per day, primarily into gasoline and fuel oil.

Ms. Chambriard told reporters the ANP hasn't evaluated the current situation of the small private refinery. However, she added that the government was "uncomfortable" with possible lack of tax payments by the refinery.

Copyright (c) 2013 Dow Jones & Company, Inc.

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