Petrobras and Ecopetrol Form Partnership

Petrobras said Monday that it was signing an agreement with Ecopetrol, the Colombian national oil company, the development of the Tibu field, in Colombia, 500 kilometers north of Bogota, near the Venezuelan border. Petrobras will participate with 55% of the investments in the Development Plan, the third phase of the project, and will keep 40% of the field's total production.

The agreement was signed by Petrobras' president, Jose Sergio Gabrielli de Azevedo, who is participating in the 2nd Colombia Oil & Gas Investment Conference 2006, in Cartagena. At the event organizers' invitation, Gabrielli delivered a speech Monday morning about "Developing Petrobras strategy in Latin America."

As a result of the activities they will carry out in the Tibu field, Petrobras and Ecopetrol estimate there may be upwards of 100 million barrels of additional reserves at the field, which would boost the current production from 1,800 barrels of oil per day (bpd) to more than 15,000 bpd. Petrobras will be in charge of performing the project's activities aiming at generating additional production, while Ecopetrol will continue as the field's operator.

The first phase of the project for the Tibu area's additional development is scheduled for January 2007, and will consist of an initial two and a half year stage. During this period, Petrobras is expected to invest $40 million in studies and work that will determine the field's actual potential, in addition to adding technology and experience to the project, reducing uncertainties and associated risks.

The Tibu field went into production in 1944 and reached its production peak in 1955, at 26,000 barrels per day. Its accumulated production totals 247 million barrels of oil. It currently has 129 active wells, among oil producers and water injectors. The oil produced there is considered light, varying from 32 to 50 degrees API (the scale the American Petroleum Institute adopts).

Partnership also in Brazil

Parallel to the activities carried out in Colombia, Petrobras and Ecopetrol kicked off a partnership for the exploration of a block in the Brazilian state of Bahia, in a 170 square kilometer area purchased in an auction held last week by the National Petroleum Agency (NPA).

Petrobras will work in association with the Colombian company in the Tucano 156 exploratory block, located in the Tucano Sul Basin, 90 kilometers away from the Bahia coast. Petrobras holds 70% participation there, and Ecopetrol, with a 30% share, will be the project's operator. This partnership represents the beginning of Ecopetrol's internationalization process.

It was in Colombia that Petrobras commenced its activities abroad, in 1972. In 2000, the company made the biggest discovery of the past 15 years in that country: the Guando Field, with reserves of 120 million barrels of oil. This field, located in the state of Tolima, 100 kilometers southeast of Bogota, is one of the areas where Petrobras performs, in partnership with Ecopetrol, in development projects in Colombia.

Petrobras is the third-largest private operator in Colombia, operating a total production 46,000 barrels of oil equivalent per day (boed) and with proven reserves of 36.6 million barrels of oil equivalent there. In 2005, the company had gross billing in the order of $310.5 million in Colombia.