Petrobras Targets 16Bboe Proven Reserves by 2010

Brazil's federal energy company Petrobras (NYSE: PBR) plans to invest some US$1.2bn annually in its domestic exploration program to boost proven reserves roughly 4% a year to 16 billion barrels of oil equivalent (Bboe) from the current 13Bboe.

The company's strategy is focused on ratio of reserves to production at around 15 years and maintaining output levels some 20% above domestic oil demand, Petrobras executive E&P manager Francisco Nepomuceno said during the Latin America Gas Summit 2006 seminar in Sao Paulo.

According to the company's projections based on a 5% annual GDP growth estimate, consumption of domestic oil derivatives could rise from some 1.8 million barrels a day (Mb/d) of oil to 2.06Mb/d in 2010, 2.30Mb/d in 2015 and 2.80Mb/d in 2020, he said.

The company will invest some US$8bn-9bn annually in E&P to ensure production remains some 20% above consumption.

Petrobras' 2006-2010 strategic business plan is pegged at US$56.4bn, of which US$34bn has been earmarked for E&P in Brazil.

The company has targeted production to rise from some 1.8-1.9Mb/d this year to 2.30Mb/d in 2010, 2.90Mb/d in 2015 and 3.45Mb/d in 2020, Nepomuceno said.

The reserves profile, however, will change to include a greater percentage of light crude and natural gas. Petrobras is moving away from traditional E&P activities in the Campos basin to the lesser-known basins of Santos, Espirito Santo and the northeastern basins, including Jequitinhonha, where more recent discoveries have been made.

"The perspectives for the northern equatorial basins [in the northeast] are good," he said. "The great promise after Espirito Santo is Jequitinhonha."

The company has already has announced plans to speed up production development of the recent discoveries in Santos and Espirito Santo, with the production start scheduled for 2008-09. Petrobras is preparing to drill nine wells in the four northeastern basins, including three in Ceara, two in Barreinhas, two in Para-Maranhao and two in Potiguar.

Additionally, exploration wells will be drilled in this year in the Camamu Almada basin, also in the northeast, close to the Manati gas field, where production is due to start in coming weeks, Nepomuceno said.

Because many of these prospects are for light crude and natural gas, the profile of Brazil's reserves will change. Of the company's total proven reserves, 15% are gas and 11% are light crude of 31 degrees API or more. The rest of the reserves are made up of heavy crude of less than 22 degrees API.

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