Petrobras to Lease FPSO for Mexilhao Startup in 2007

Brazil's federal energy company Petrobras (NYSE: PBR) plans to lease a floating production, storage and offloading vessel (FPSO) to start producing natural gas at the Mexilhão field in the Santos basin in 2007, a company spokesperson told BNamericas, confirming local press reports.

The company wants to bring production forward by two years to encourage the use of natural gas in the country and meet projected demand growth when 3,000km of gas pipelines in the southeast and northeastern regions are completed by the end of 2006, the spokesperson said.

When Petrobras declared Mexilhão field's 419 billion cubic meters of gas reserves commercially feasible in 2004, the company had planned to start production in 2009. It said last week that it would bring that date forward to 2008 and now it is looking at starting production as early as 2007.

The FPSO will have capacity to produce 15 million cubic meters of gas a day. However, the vessel will be a temporary solution since the company plans to tender a fixed platform for the field.

The company is preparing to invite companies to bid on the contract this year, the spokesperson said. The Mexilhão gas field has attracted interest from various oil companies.

Petrobras is in talks with Spanish oil company Repsol YPF (NYSE: REP) to form a joint venture to develop the field. Anglo-Dutch oil company Shell has also reportedly declared its interest in an association with Petrobras for the Mexilhão project.

Investment in the project is estimated at US$3bn, local daily O Estado de São Paulo reported.

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