Petrobras Inks E&P Deal for the Portuguese Sea

Petrobras and Portuguese corporations Galp Energia and Partex have signed an agreement for oil exploration and production in four Lusitaniana Basin blocks, off the coast of Portugal, to the north of Lisbon. The signing ceremony took place Friday, May 18th, in Lisbon. With a 50% stake, Petrobras will be the project's operator. Galp Energia and Partex, meanwhile, will hold 30% and 20% interest in it, respectively. This will be the first exploration and production activity ever to be held off the Portuguese coast.

This agreement is the outcome of the memorandum of understanding (MOU) that the Prime Minister of Portugal, Jose Sócrates, and Petrobras' President, Jose Sergio Gabrielli de Azevedo, signed in 2006 at Petrobras' Rio de Janeiro headquarters. Chief of Staff, Dilma Roussef, and Finance Minister, Guido Mantega, attended the event.

The Camarao, Ameijoa, Mexilhao, and Ostra blocks are located at water depths ranging from 200 to 3,000 meters and cover a total area of 12,000 square kilometers. The consortium the three companies have formed is expected to concentrate on deepwater hydrocarbon prospecting.

The agreement foresees an 8-year exploration period, which will involve seismic acquisitions and exploratory well drilling. Initial first stage investments are expected to range from $20 to $30 million, a figure which, depending on the studies' technical assessments, may be even higher.

Petrobras' participation in this agreement is significant not only because it is the company's debut a new exploratory frontier, but also because it signals good results are expected to be achieved in Portugal.

The negotiations between Petrobras, Galp, and Partex were expeditious due to the great interest the three companies have in the project. The first agreements were signed with the Portuguese government in March 2006. Galp and Partex already work in partnership with Petrobras in E&P agreements in Brazil.

Held in Lisbon, the signing ceremony was attended by the presidents of Petrobras, Jose Sergio Gabrielli de Azevedo, of Galp Energia, Manuel Ferreira Oliveira, and of Partex, Emílio Rui Vilar. The Portuguese ministers of the Environment, Territory Exploration, and Regional Development, Francisco Nunes Correia; and of Finance & Innovation, Manuel Pinho, in addition to Petrobras directors, also attended the event.

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