Petrobras Sees Continued Growth, Expects to Meet '09 Output Targets

RIO DE JANEIRO (Dow Jones Newswires), May 13, 2009

With a fresh daily production record in hand, Brazilian state-run oil firm Petrobras (PBR) expects to hit its domestic oil and gas production targets in 2009, the company's CFO said Wednesday.

The optimism at Petrobras, which has typically struggled to meet its yearly production targets, comes after the company set a daily production record of 2.059 million barrels of crude oil on May 4. That topped the previous record of 2.012 million barrels set March 4.

"We expect the growth in production to continue," Petrobras' Almir Barbassa said during a presentation for analysts in Sao Paulo.

Petrobras domestic oil and gas production target for 2009 is an average of 2.5 million barrels of oil equivalent, or BOE, a day. In the first quarter, the company produced a daily average of 2.261 million BOE.

After the latest daily record, Petrobras reached its target of 2.05 million barrels a day in terms of domestic oil output alone. Maintaining that level of output, however, is the greater challenge, Barbassa said.

"Let's see how the growth in production plays out over the next couple months," Barbassa said, noting that May's record was merely a daily record for production -- not the daily average the company uses for its output targets.

The company averaged daily domestic oil output of 1.952 million barrels in the first quarter.

But there is some flexibility in the full-year target, according to Barbassa. The company considers itself on target if output falls within a range of plus or minus 2.5% of the official target -- which Barbassa said he believed Petrobras was currently within striking distance.

Petrobras has benefited from the installation of three new platforms in the key Campos Basin over the past few months. The Campos Basin produces more than 85% of Brazil's crude oil.

Petrobras' P-53 and "Cidade de Niteroi" platforms entered production in the Marlim Leste field, while the P-51 platform started output in the Marlim Sul field. When the three platforms reach capacity, they will add production of about 460,000 barrels of oil a day.

The three platforms produced an average of 99,000 barrels a day as wells were hooked up and ramp-up continued, Barbassa said.

In addition, two platforms installed in the Roncador field -- the P-52 and P-54 -- also ramped up output over the past few months.

Earlier this month, Petrobras also pumped the first oil from its Tupi subsalt field, with the "BW Cidade de Sao Vicente" producing about 14,000 barrels a day, Barbassa said.

Later this month, the "Cidade de Sao Mateus" FPSO, or floating production, storage and offloading vessel, is also expected to start daily production of 10 million cubic meters of natural gas at the Camarupim field in the Espirito Santo Basin.

Two fields operated by oil majors Chevron (CVX) and Royal Dutch Shell (RDSA.LN) will also add to Petrobras production figures, Barbassa added. Petrobras holds a 30% stake in Frade, operated by Chevron, and a 35% stake in Shell's Parque das Conchas project.

The FPSO "Frade" will be installed at the Frade field later in the second quarter, while the FPSO "Espirito Santo" will come onstream in the third quarter, Barbassa said. The two FPSOs each have installed capacity to produce 100,000 barrels of oil a day.

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