Brazil's Petrobras May Start Argentina Offshore E&P in 2006

RIO DE JANEIRO Dec 06 2005 (Dow Jones Commodities News Select via Comtex) By Bernd Radowitz, Dow Jones Newswires

Brazil's state-run oil firm Petroleo Brasileiro SA (PBR), or Petrobras, next year may start to explore for oil and gas off the coast of Argentina, Decio Oddone, the company's Southern Cone executive manager, said Monday.

Petrobras most likely would drill for oil off the center of Argentina, he added. So far, there is almost no offshore production by oil companies in the country, with the exception of some gas output off the Southern Tierra del Fuego region by French oil company Total (TOT), he said.

Petrobras currently is in talks with Argentine state-run energy company Enarsa over where and under which terms Petrobras would start its Argentine offshore E&P activities. Enarsa has the monopoly to grant offshore exploration rights in Argentina, Oddone said.

Petrobras and Enarsa in October had signed a memorandum of understanding to start talks on a future joint exploration of offshore areas in Argentina, and offshore and onshore areas in other countries of South America's Southern Cone.

In exchange for guarantees for production rights, Petrobras will be responsible for investments and bring with it its expertise in deep water E&P.

Petrobras currently produces less than 100,000 barrels of oil a day in Argentina, but only from onshore areas. In Brazil, meanwhile, most of Petrobras' daily oil output over 1.7 million barrels of oil comes from offshore operations.

Geological data on Argentina's offshore areas are still very scarce, Oddone added, which makes it impossible to make precise plans over the extend of future E&P activity in the country. Also, he couldn't say, how much Petrobras may invest in Argentine offshore drilling.

"Argentina is still a virgin offshore area," Oddone said. "It's much more frontier than Brazilian offshore areas, for example."

(C) 2005 FWN Select. All Rights Reserved

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