Partex Prepares to Start Oil, Gas Output

Portuguese independent oil company Partex is preparing to start commercial oil and gas production in Brazil after beginning production tests in the Santos and Potiguar basins, company chairman Antonio Costa Silva told reporters on Tuesday.

Partex has 10 exploratory blocks in Brazil, where it has invested some US$38mn in the past five years.

"We are carrying out production tests in the Santos basin in June to appraise potential," he said. "Because the block is 240km from coast, the reserves have to be large enough for it to be commercially feasible. The field can only be considered commercial if it's large enough, that is, if it has recoverable reserves of 5-10 trillion cubic feet."

Partex has a 10% stake in block BM-S-10 in the Santos basin. Brazil's federal energy company Petrobras (NYSE: PBR) is the operator with 65% and Britain's BG Group has 25%. Total investment so far in the block has been US$100mn.

The field is located at water depths of 2,000 meters and well depths of over 7,500 meters. The company has found natural gas there, Silva said, pointing out that development of the field could take 5-6 years.

The company is preparing to start long-term production tests in the onshore POT-T-558 block in the northeast Potiguar basin and hopes to have enough information by November to decide whether to declare commercial feasibility or not.

"This is a difficult field to appraise because of the quality of oil," said company Brazil manager Alvaro Ribeiro, adding it has a high paraffin content. "We should be drilling another four wells there in June."

Partex has a 50% stake in POT-T-558, one of six blocks in the Potiguar basin.

Other good prospects are in the offshore SEAL-M-9 block in the Sergipe-Alagoas basin and in the onshore BES-T-14 in the Espirito Santo basin. In the first, Petrobras is the operator with 85% and Partex with 15% and in the second Partex is the operator with 50%.

The company is confident that both blocks contain oil, and SEAL-M-9 could start commercial production sometime from 2010-12, Ribeiro said.

The company is now considering whether it will bid in the eighth hydrocarbons exploration licensing round scheduled for August 28.

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