Petrobras Bets on Frontier Areas for New Finds in Brazil

Brazil's federal energy company Petrobras (NYSE: PBR) expects future large scale hydrocarbons discoveries to be in the new frontier areas of the Espírito Santo, Santos and Potiguar basins, company exploration and production director Guilherme de Oliveira Estrella said in a conference call on Friday.

Campos is already a mature basin and so new discoveries there are "rare," he said.

Petrobras picked up five "very nice" Potiguar basin blocks in the seventh hydrocarbons licensing round held October 17-19 and will drill two wells there next year, Estrella said. The investment commitment in that basin is US$40mn.

In the Espírito Santo basin, gas expectations are in shallow water, where Petrobras committed to invest US$90mn to drill six wells, while oil expectations are in deep water, where the company will drill one well and invest US$27mn. The emphasis in the Santos basin is on gas, where Petrobras will invest US$250mn to drill eight wells in deep water and spend US$45mn to drill three wells in shallow water.

In round 7 Petrobras added 40,000 sq km to its exploration portfolio, which now stands at 160,870 sq km, of which almost 110,000 sq km are deepwater. Onshore acreage is important too, and Estrella pointed out that Petrobras implements pilot projects using new technology on onshore properties, with an eye to transferring the technology offshore later.

Petrobras will invest US$1bn in domestic exploration every year through 2010, Estrella said.

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