Petrobras Plans to Boost Gas in High Potential Areas

Brazil's federal energy company Petrobras (NYSE: PBR) plans to increase gas production by 24 million cubic meters a day (Mm3/d) in 2008 by investing in well-known prolific areas off the coast of Espirito Santo state, where it continues to find oil and gas, according to recent data from hydrocarbons regulator ANP.

The company announced on May 18 it wants to produce 16.5Mm3/d in Espirito Santo, mainly from three fields, as part of efforts to increase supply of the fuel in the southeastern region.

Production would come mainly from the development of recent finds in the 1-ESS-160, 1-ESS-164 and 1-ESS-130 fields, which are still under appraisal and have not been declared commercially feasible yet, Petrobras said.

Wells 1-ESS-164 and 1-ESS-160 are located in the deepwater BES-100 block in the Espirito Santo basin, in which Petrobras has 100% interest and where the productive Golfinho field is located, a company spokesperson told BNamericas. Together these two fields have estimated recoverable reserves of 280 million barrels, Deloitte Petroleum Services analyst Mauro Andrade told BNamericas.

The company continues to register oil and gas discoveries there. The latest finds were on May 9 and April 25 both for oil and gas.

The 1-ESS-130 is located in the ultra-deep waters of the BC-60 block, also off the Espirito Santos basin, but geologically located in the Campos basin. Petrobras also owns 100% interest in the block and produces heavy crude there from its so-called Whale Park.

Petrobras expects to produce light crude there in contrast to most production in the Campos basin since in 2003 it registered light crude finds. The company also continues to find oil in the block and made a registered find there as recently as March, according to ANP data.

The race is now on to guarantee production by end-2008, especially since oil companies are facing increased demand for services and equipment.

"2008 is tomorrow in oil industry time," Andrade said. "I think Petrobras will do its best to meet the deadline but will likely have to delay the projects [after] taking into account the scarcity of drilling and pipeline-laying ships."

The result of speeding up plans could also result in higher development costs since equipment lease costs have surged in the last years.

"Maybe it's the price you have to pay to guarantee supply in the short term," Andrade said.

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.