"We expect the investments to continue making good returns," he said referring to the record 23.7bn-real profit posted in 2005.
Barbassa said the budget accounts for the higher prices of equipment and services but does not account for the 17% appreciation of the local currency, the real, against the US dollar in 2005.
An appreciated real gives Petrobras more buying power in US dollars, the currency most commonly used for oil contracts. In June, the company plans to conclude a revision of its investment plan for 2007-2011 in which it will take into account currency factors.
The company's 2006-2010 investment program is budgeted at US$56bn.
Most of the investment in 2006, some 18.9bn reais, will continue to be in exploration and production, which accounted for 62%, or 16bn reais, of total investment in 2005.
"These investments are essential to maintain the country's oil self-sufficiency," said Barbassa.
The company says the new production units scheduled to start operations throughout 2006 will allow the company to produce an average of 1.91 million barrels of oil a day (Mb/d), up from 1.85Mb/d in 2005.
The main projects to start operations in 2006 are the P-50 180,000b/d floating production, storage and offloading vessel that will produce oil in the Albacora Leste field in the Campos basin, the P-34 FPSO in the Jubarte field also in the Campos basin and the start of production in the light crude fields Golfinho, Peroa and Caongoa in the Espirito Santo basin.
The last two projects are considered important because they will increase Petrobras' light crude output allowing it to continue to reduce imports of the fuel.
In refining, the company will continue investments in its 11 domestic refineries to expand capacity to process heavy crude produced in domestic fields and to improve the quality of fuels produced. The 11 refineries in Brazil have a combined capacity to process 2Mb/d.
Total investment in refining in 2006 will be 3.2bn reais, Petrobras said in a statement.
"We have to produce fuels and lubricants of the highest quality to keep up with international trends, especially because part of our products are exported to countries will higher requirements on pollution emissions," he said.
One the largest projects that Petrobras plans to start in 2006 is the US$900mn modernization of its 251,000b/d Revap refinery. Petrobras is concluding talks over financing for the project, it said in its 2005 balance report.
GAS & POWER
Another business area where the company will also concentrate is the construction of natural gas pipelines and acquiring control of gas-fired power plants. The company plans to invest 6.7bn reais in this area in 2006.
According to Petrobras officials, the company plans to conclude soon tenders for the 1,400km Gasene gas pipeline project, including a new tender for the smallest of the three Gasene stretches.
A new tender for the smallest stretch of Gasene should be completed soon. The project is considered strategic to increase gas supply in the northeastern region of the country.
The project has been delayed because of heavy costs, which are now estimated at US$2bn, double initial estimates of US$1bn.
In 2005, the company invested 2.7bn reais in gas and power mainly for the acquisition and control of the 388MW Eletrobolt and the 240MW Termoceará plants and the construction of gas pipelines.
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