Petrobras, Repsol YPF to Wrap Up Mexilhao Talks by Early March

Brazil's federal energy company Petrobras (NYSE: PBR) plans to conclude talks with Spanish oil company Repsol YPF (NYSE: REP) by early March for the development of the offshore Mexilhao natural gas field in the Santos basin, news agency Agencia Estado (AE) quoted Petrobras E&P director Guilherme Estrella as saying.

The two companies have been negotiating a partnership to develop Mexilhao since the first half of 2005.

The companies are now analyzing the latest results of drilling in the field to estimate the reserves there and potential for production, Estrella told Agencia Estado. Initial estimates put Mexilhao reserves at some 419 billion cubic meters and production at up to 15 million cubic meters a day.

Petrobras has earmarked US$18bn to explore and develop the Santos basin through 2010 including Mexilhao's development as one of the five existing projects in the basin.

Negotiations for the hiring of a fixed platform to explore the field are close to conclusion and Petrobras is now preparing a tender to build a natural gas processing plant in the coastal town of Sao Sebastiao on the northern Sao Paulo state coast 140km from Mexilhao, AE reported.

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