Petrobras Aims to Boost Peru Output

LIMA Aug 10, 2006 (Dow Jones Newswires)

Petroleo Brasileiro SA (PBR), or Petrobras, expects to be able to increase its production of oil and natural gas in neighboring Peru, Petrobras President Jose Sergio Gabrielli said Thursday after meeting with Peru's president, Alan Garcia.

"We have good expectations to be able to improve the factors of recovery in the mature fields in petroleum, and have the possibility of using new technologies in the production of gas. We hope there will be a positive increase in our participation in Peru," Gabriella said at a press conference.

Petrobras' Peru operations produced 12,927 b/d of oil in Block-X in July. It also had output of 12.21 million cubic feet of natural gas a day in July, for a total of 378.38 million cubic feet.

The company had earlier noted that it has an active drilling program under way in Block-X, considered a marginal field.

It has exploration and production contracts in various areas, including in Peru's southeastern jungle region near the Camisea natural gas project, which came onstream in mid-2004.

The talks also looked at the possibility of Petrobras undertaking projects alongside state-owned Petroleos del Peru S.A. or Petroperu, which could include evaluating the modernization of the Talara refinery.

"There are complementary activities between Petrobras, which is currently carrying out exploration, and with Petroperu, with its experience in refining," he added.

Garcia, at the same press conference, said that Gabrielli's visit involved "conversations with Petroperu and officials with the Energy and Mines Ministry over the possibility of an increased presence of Petroperu, and to sign a memorandum of investment and joint work between the two companies."

Gabrielli also said that negotiations were continuing in the company's dispute in Bolivia.

"We have the possibility of finding a negotiated solution. We are in discussions with Bolivia. Nothing is closed," he said.

When asked if Petrobras had a price that it wanted Bolivia to provide in compensation for taking over Petrobras facilities, Gabrielli said, "The negotiations aren't over price levels, but over the formula for adjusting prices."

On May 1, Bolivian President Evo Morales nationalized the country's oil and natural gas resources. Bolivia also demanded a renegotiation of prices for gas shipped to Brazil.

Bolivia wants to increase the price of its gas exports to Brazil to a level compatible with international markets, where prices are higher than those it currently receives.

Brazil currently imports 25 million cubic meters per day, with an option to increase that total to 30 million per day.

Under their contract, the two nations have 45 days to reach an agreement on prices once one of the parties questions the price level. The 45-day period lapses on Aug. 15, after which time Bolivia can ask for more time or it can ask for arbitration.

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