Brazil's Lula Sees Petrobras Furthering Investments Abroad

RIO DE JANEIRO (Dow Jones Newswires), May 21, 2009

Brazilian state-run energy giant Petrobras (PBR) shouldn't be afraid to make investments overseas, President Luiz Inacio Lula da Silva said Thursday during a visit to Turkey.

"[Overseas investments] will help the company have more access to sources of oil," Lula was quoted by the local Estado news agency as saying. "Gasoline prices, which are already cheap in Brazil, could become even cheaper [with more overseas exploration]."

Petrobras will sign an exploration deal with the Turkish Petroleum Corp., or TPAO, Friday. The deal will cover exploration in the Black Sea, which Turkey estimates holds 10 billion barrels of oil.

Earlier this month, Petrobras and Turkey's TPAO agreed to operate a drilling rig in the Black Sea.

Petrobras agreed to cede control of the Leiv Eiriksson rig to Turkish Petroleum for exploration activities in the Sinop offshore oil block. Petrobras expects the rig to arrive in Turkey in late 2009, and drilling operations are seen beginning in the first quarter of 2010.

Petrobras began oil production activities in Turkey in February 2006, after successfully bidding to operate in two blocks in the Black Sea. As a result, Petrobras and TPAO signed operation agreements that ensured 50% stakes for each company for the exploration and production of blocks 3920 (Kirklareli) and 3922 (Sinop).

Petrobras said it completed seismic studies in the areas in late 2008 and is now beginning the well-drilling phase.

Copyright (c) 2009 Dow Jones & Company, Inc.

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