Norsk Hydro Moves Forward Brazil Oil Output Start to '09

Dow Jones Newswires

RIO DE JANEIRO, Nov 29, 2006 (Dow Jones Newswires)

Norwegian energy firm Norsk Hydro ASA (NHY) in late 2009 plans to start producing up to 100,000 barrels of oil a day from a Brazilian field, Luis Amorim, vice president for business development in oil and energy of its Brazilian unit, said Wednesday.

The company had earlier said it plans to start producing at the field in the BM-C-7 block in Brazil's oil-rich Campos Basin in 2010.

Norsk Hydro has a 50% operating stake in the field, which it bought from EnCana Corp. (ECA) for $350 million in August 2006, following a sales agreement in November 2005.

Anadarko Petroleum Corp. (APC) holds another 50% stake in the field.

Norsk Hydro now calls the field Peregrino, changing the name from Chinook, which had been used by EnCana.

The Norwegian firm since late 2005 has invested $400 million in Brazil, Amorim said.

Brazil is part of the company's core business, he added.

Norsk Hydro at a two-day Brazilian government auction for oil and gas exploration and production blocks Tuesday won a 7 million real ($3.2 million) bid for the SM-1105 deepwater offshore block in a promising new frontier area in Brazil's Santos Basin.

But as the annual Brazilian auction was suspended after half a day by a court decision Tuesday, it is not clear yet whether the awarded exploration and production licenses will be valid.

Norsk Hydro would have a 40% operating stake in the block, if valid, with Spanish energy firm Repsol-YPF (REP) and Brazil's state-run oil firm Petroleo Brasileiro SA (PBR), or Petrobras, each holding 30%.

Norsk Hydro also has non-operating stakes in two more deepwater Santos Basin blocks in which Repsol was awarded operating stakes Tuesday. Those two bids combined are worth BRL29 million.

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