Brazil's Mexilhao Gas Field Start May Face 6-Month Delay

Mexilhao Field
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The production start at Brazil's large Mexilhao gas field off the coast of Sao Paulo state may be delayed once more, the Estado newswire said Monday.

Brazil's state-run oil firm Petroleo Brasileiro SA, or Petrobras, planned to start producing 9 million cubic meters a day of natural gas from Mexilhao in early 2009. But Acergy SA, which holds a $400 million contract to install sub-sea pipeline from Mexilhao to the coast, asked Petrobras to delay its work by half a year due to a missing environmental license, Estado said.

Petrobras had originally planned to start production at Mexilhao in 2008. Output from the field is needed to satisfy the rapidly increasing gas demand from Brazilian industry, thermoelectric power plants, cars and households.

The Maua Jurong shipyard in Niteroi near Rio de Janeiro currently is building a 1.1 billion reals ($645 million) platform for the Mexilhao project, the newswire said.

Acergy also asked for an additional $150 million as equipment for the pipeline got more expensive due to the heating up of the oil services industry, Estado said.

Copyright (c) 2008 Dow Jones & Company, Inc.


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