Santos Basin Business Plan to be Ready by H2

Brazil's energy company Petrobras (NYSE: PBR) plans to conclude by the start of the second half of this year a detailed business plan that will allow the Santos basin to produce 300,000 barrels of oil equivalent by 2010, Santos basin business unit (UN-BS) general manager Jose Marcusso told BNamericas.

"The Santos basin is very strategic for the country and will become one of the three largest oil producing districts in the country," he said, referring also to the Campos and Espirito Santo basins.

Marcusso assumed his post in January this year, when Petrobras announced plans to invest US$18bn in the Santos basin over the next 10 years. Petrobras' E&P business is divided into eight business units, with UN-BS the most recently created.

Santos is where Petrobras' 419 billion cubic meter Mexilhao gas field and the producing Merluza gas and oilfield is located.

By end-2010 the company and its partners plan to produce 30 million cubic meters a day (Mm3/d) of natural gas and 100,000 barrels of oil a day from Santos, Marcusso said.

Growing demand for natural gas in the country and the Santos basin's closeness to the industrial hub of São Paulo make investment in the projects feasible. Although production at older fields like Merluza, Coral and Cavalo Marinho is ongoing, the large finds in Mexilhao were not registered until early 2000.

Aside from these fields, Petrobras is counting on future production from the BS-500 block in the same basin, which it is appraising.

Mexilhao itself is scheduled to start production in 2008 at a rate of 8-9Mm3/d. The basic feasibility studies for Mexilhao are concluded and have been approved by top Petrobras management. Complete feasibility studies are now expected to be approved by April.

Marcusso declined to say how much would be invested in the project.

Talks between Petrobras and Spanish oil company Repsol YPF (NYSE: REP) on the Mexilhao exploration are ongoing, although Marcusso said he was not involved.

Repsol YPF's Brazil, Bolivia and Argentina asset management head Juseba Murillo told reporters during a seminar in Rio de Janeiro there is no deadline for the talks to end.

Visit BNamericas to access our real-time news reports, 7-year archive, Fact File company database, and latest research reports. Click here for a Free two week trial to our Latin America Oil & Gas information service.