Petrobras Ready for Mexico Oil Partnership

RIO DE JANEIRO Aug 25, 2006 (Dow Jones Newswires)

Brazil's state-run oil firm Petroleo Brasileiro SA (PBR), or Petrobras, is ready to upgrade its status of a mere service provider to that of a partner of Mexican oil monopoly Petroleos Mexicanos, the Gazeta Mercantil newspaper said Friday.

Petrobras is prepared to send drilling rigs and investments to Mexico's Gulf waters as soon as president-elect Felipe Calderon were to change Mexico's oil legislation and allow foreign companies in, Claudio Castejon, executive manager at Petrobras' international area is quoted as saying.

Castejon spoke at a seminar in Rio de Janeiro Thursday.

Calderon just days after Mexico's elections in early July had said he was interested to learn from Petrobras about deep water exploration and production, in which Petrobras has a vast expertise.

Pemex sees deepwater exploration as the long-term answer to replacing reserves and output, particularly as its main oil-producing field Cantarell has started to decline.

Petrobras is already drilling dozens of wells on the U.S. side of the Gulf of Mexico, and expects to produce 100,000 barrels of oil a day there by the end of the decade.

The Brazilian firm sees synergies between its operations on the U.S. Gulf of Mexico side and possible operations in Mexican waters, Castejon is quoted as saying in Gazeta.

Petrobras currently is a service provider to Pemex in two oil blocks on land, the newspaper said.

Copyright (c) 2006 Dow Jones & Company, Inc.

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