"In seismic and exploration drilling we will spend US$50mn, but our production budget is still being studied," he said at a press conference at the Rio de Janeiro Oil & Gas seminar.
"Brazil is our primary focus for E&P outside the US."
El Paso's 2003 exploration and production spending was US$20mn, excluding the US$61mn it agreed to pay for Unocal's stake in the two northeastern fields, he said. Of its interests in 16 offshore concession areas, eight are exploration blocks and eight are in the production development phase. Part of the investment will go to the two new blocks the company obtained at Round 6 in the northeastern Camamu Almada basin.
In these two blocks, El Paso and its partners should invest US$20mn in the next two years. In its other fields in the Camamu Almada basin (one wholly owned block and two with other companies), El Paso hopes to obtain a drilling license in the coming year. In the wholly owned BM CAL 4 field, exploratory drilling should start by September 2005.
The company also has exploratory areas in the Potiguar basin, where it will invest with its partner, Brazil's federal energy company Petrobras (NYSE: PBR) in the development of the Arabaiana and Pescada fields, he said. El Paso has a 35% interest in each field, and Petrobras has 65%.
Two of the other four Potiguar basin concessions (Dentao and Guaiúba) are being developed while exploration continues in the BM POT 11 and BM POT 13 blocks, Barton said. Petrobras is the operator of all four concessions.
El Paso has also earmarked US$30mn-40mn to appraise and develop the Lagosta field (formerly the Luana field in BS 1 block) in the Santos basin, where it declared commercial feasibility in September. Lagosta's output is seen between 500,000 and 1 million barrels a day. "We expect to start producing in 2007 in Lagosta," Barton said. The Tadeu field, whose commerciality was also declared recently, is still under appraisal.
Meanwhile, the US company continues to study ways to explore for gas at the Camamu Almada basin, off the northeastern Bahia state coast. "We are looking for ways to integrate our upstream and downstream business," he said.
The company is studying building a power generation plant as an offtaker for the fuel, or signing contracts with a local natural gas distributor, he said. "These are the options we are studying, both of which would be through a partnership," he said.
El Paso has invested US$400mn in exploration and production in Brazil since 1998.
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