Petrobras Sees Tupi Peak Production in 10-15 Years
ROME Nov 12, 2007 (Dow Jones Newswires)
Brazil's state-run oil firm Petroleo Brasileiro SA (PBR), or Petrobras, anticipates that the hydrocarbon production at its key Tupi oilfield will peak in 10-15 years, Chief Executive Sergio Gabrielli said Monday.
Peak production at Tupi will "very likely" be over 200,000 barrels of oil equivalent - or BOE - a day at that point, Gabrielli told Dow Jones Newswires during an interview on the sidelines of the industry's World Energy Congress here.
He added that it's too early to provide a more precise estimate.
Last week, Petrobras said it estimates the recoverable volume of oil and gas at the ultra-deep Santos Basin Tupi field at between 5 billion and 8 billion BOE.
That makes Tupi one of the biggest oil discoveries in years outside of countries belonging to the Organization of Petroleum Exporting Countries, comparable in size to the Kashagan oil field in Kazakhstan.
Gabrielli noted that indications are that Tupi will produce a large volume of natural gas, as well as relatively light oil, cheaper to refine than that produced in other Petrobras deep-water fields.
Petrobras is Tupi's leading field operator with a 65% stake, and U.K. energy company BG Group PLC (BG.LN) holds another 25% of the field. The remaining 10% stake is controlled by Portugal's Galp Energia SGPS SA (GALP.LB).
Gabrielli said that Petrobras also expects to get indications on the size of possible reserves in blocks BM-S-9 and BM-S-10 - in waters close to Tupi - over the next few months.
The size of Tupi's reserves surprised analysts, as it doubles earlier estimates.
Last week, Petrobras said it's targeting a daily production of 100,000 BOE at Tupi, in a so-called pilot platform, by 2010-2011.
Bolivia Situation Seen On The Mend
Gabrielli also said he is optimistic about ongoing talks between Petrobras and the Bolivian government, seeking an increase of Petrobras' investment and natural gas production in Bolivia.
However, he said in any case Petrobras doesn't foresee an increase in the volume Bolivian natural gas imported into Brazil before the end of the current contract, which runs until 2019.
The relationship between both parties has been rocky since the 2006 oil and gas nationalization in Bolivia. The country pressured foreign oil and gas firms into new production contracts that hiked taxes and royalties on gas output to about 82% from 50% previously.
Since then, Petrobras and other foreign companies like Repsol YPF SA (REP) have kept new investments to what is absolutely necessary to keep up current production levels.
"The situation in Bolivia is improving, we're getting more clarity," Gabrielli said.
He said he doesn't anticipate short-term increases in fuel prices in Brazil. Petrobras, which obtains most of its sales in its home country, has kept domestic fuel prices frozen since 2005.
Gabrielli said this freeze is a consequence of the strength of the Brazilian real against the U.S dollar, which has cushioned the effect of higher international oil prices. Petrobras buys light oil in international markets, which it mixes with the typically heavier oil it produces.
Gabrielli said he believes Brazil should consider the possibility of joining the Organization of Petroleum Exporting Countries, or OPEC, but only if and when it becomes a more significant hydrocarbon exporter than it is now.
He made the comment in response to a recent statement by Venezuela's president Hugo Chavez, in which he said he would welcome Brazil into the OPEC.
Copyright (c) 2007 Dow Jones & Company, Inc.
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