"This is a potential reserve estimate that we are detailing, but the reserves could be larger," Petrobras' Espírito Santo business unit exploration manager Hércules Ferreira said.
Petrobras expects 50% of the new reserves to be light crude.
Espírito Santo state currently produces 40,000 barrels a day (b/d) of oil and 1.4 million cubic meters a day (mcm/d) of natural gas. The investment aims to increase this production significantly.
The first jump in output will be in 2006, after the start of commercial operations of the P-34 floating production, storage and offloading vessel on the Jubarte oil field and the start of commercial operations at the recently discovered Golfinho field.
The two fields benefit from Espírito Santo's good geography and geology. Jubarte is off the state's southern coast, in the Campos sedimentary basin and produces heavy oil (17 degrees API), and Golfinho is in the Espírito Santo basin and has light oil (28-34 degrees API) and lots of natural gas. Both basins are accessible from the state.
"We have a good diversity of light, heavy and ultra heavy crude, on land and in shallow, deep and ultra-deep waters," Ferreira said.
The state has been producing heavy oil from onshore wells in the north since the 1960s, but since Petrobras registered in 1999 its 650 million-barrel Jubarte reserves, the state also produces oil from deepwater wells.
In 2001, the state's potential was reconfirmed when Petrobras discovered oil at Golfinho, from which the company also plans to extract as much as 8mcm/d of gas by 2006.
This diversity is the reason that Petrobras will invest 19% of all its 2004-2010 exploration and production budget in the state. Most of the money will go to develop the proven fields such as Jubarte, neighboring Cachalote, and Golfinho.
The rest of the money will go to explore the 26 new blocks the company obtained alone or with other companies in Round 6 licensing earlier this month.
"The company had to renew its project portfolio," Ferreira said, adding that 10 of the new blocks are located around the Golfinho field.
Petrobras will develop 12 of these blocks alone. Another 14 will be developed in partnership with other companies such as Shell, Portugal's Petrogal, US company Kerr-McGee, Canada's Encana and Spain's Repsol YPF. Brazilian independent oil company Synergy also bought one exploration license alone in the Espírito Santo basin, where it plans to invest 3mn reais (US$1mn).
"The state was the star of the tender," Espírito Santo government's development secretary Júlio Bueno told BNamericas. "It has reserves of oil in a diversity of conditions and that attracts investments - a natural gift that does not need government intervention."
The state's proven total oil reserves will triple to more than 3 billion barrels of oil, according Bueno's estimates.
Another big investor in Espírito Santo is Shell, which already has proven reserves of 500 million barrels in the BC-10 well, but because it is heavy oil, the company is still carrying out commercial feasibility studies, a Shell spokesperson told BNamericas. The company will only conclude studies in 2005, he said.
Other investments come on the footsteps of the oil exploration ventures, Bueno said.
While Germany's Mannesmann and Italy's Pirelli are planning to invest in plants in the state to supply the oil and gas industry, the state is in talks with Persian Gulf Oil, a recently created London-based company with British-Arab capital, for the construction of an oil refinery in the state in coming years.
"We have signed a letter of intent and are moving forward with the agreement," he said. The company plans to produce oil derivatives for exports, he said.
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