BG Group Brazil Unit: Drilling Rig Search Continues

RIO DE JANEIRO (Dow Jones Newswires), Jun 03, 2008

The Brazilian unit of BG Group PLC (BG.LN) continues to search for drilling rigs to meet deadlines for exploring Brazil's promising pre-salt region of the Santos Basin, the company's president told the Estado news agency Monday.

Luiz Costamillan, who heads BG Group's local unit, told Estado that the company is working feverishly to meet concession requirements from Brazil's National Petroleum Agency, or ANP. The deadlines for several blocks fall at the end of 2008 and the start of 2009.

"We don't expect to ask for an extension of the periods. For now, we're confident that we'll be able to fulfill the (exploration) program," Costamillan said.

BG Group is a partner with state-run energy giant Petroleo Brasileiro (PBR) in several key exploration blocks focused on the pre-salt region, including the Tupi and Carioca finds. In November, Petrobras said that Tupi could contain recoverable reserves of as much as 8 billion barrels of oil equivalent, or BOE.

Drilling in the pre-salt layer is risky and expensive, according to analysts. Oil found in Brazil's pre-salt area lies at a water depth of more than 2,000 meters, as well as under an additional 5,000 meters of sand, rock and salt.

According to Costamillan, only drilling in the Carioca discovery has been significantly delayed because the drilling rig that was there had to move to a different area. A new drilling rig should be on site soon, Costamillan said.

Three drilling rigs should enter operation by the end of 2008 and start of 2009. The first, which will be destined for Tupi, was expected to arrive in Brazil in October, with the other two expected to begin drilling in the first quarter of 2009 - one each at Tupi and Carioca.

Last week, Petrobras said its board approved a tender for 12 deepwater drilling rigs. The rigs are expected to be delivered by the middle of 2012. In addition, 28 rigs will round out a more-than-$20 billion program through 2017.

Copyright (c) 2008 Dow Jones & Company, Inc.

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