Petrobras to Open Wallet for 2010-14 Investment Budget

RIO DE JANEIRO (Dow Jones), Dec. 4, 2009

Brazilian state-run energy giant Petrobras (PBR) will likely increase its investment budget when the company's 2010-2014 strategic plan is announced in the first quarter next year, Chief Executive Jose Sergio Gabrielli said Friday.

Quoted by the local Estado news agency, Gabrielli said that Petrobras' investments "will probably increase" from the $174.4 billion 2009-2013 budget announced in January 2009. Gabrielli made the comments at an event in Sao Paulo.

"How much, I can't say," the executive added.

Last year's investment plan was among the largest in the global oil industry, despite the onset of the economic slowdown and financial meltdown that sent international oil prices tumbling. While other companies cut back, Petrobras turned aggressive as it started development of a rich new offshore oil province.

The so-called subsalt finds were made under a thick layer of salt in the Santos Basin off the coast of Sao Paulo and Rio de Janeiro states. The oil lies under more than 2,000 meters of water and a further 5,000 meters under sand, rock and a shifting layer of salt.

Earlier this week, Gabrielli said that the strategic plan will be completed in the first quarter of 2010.

According to Gabrielli, Petrobras is in the evaluation phase. "There are almost 4,000 projects and the process involves hundreds of people," the CEO said.

One project that will not be moving forward is an ethanol venture with Mitsui Trading, the big commodities unit of Japanese industrial conglomerate Mitsui & Co. The two companies were expected to build an ethanol mill at Taruma in Goias state. The ethanol was to be exported to Japan for use in electricity generation.

Gabrielli declined to give a reason for the cancellation.

"We have various other biofuels projects in progress, including ethanol," Gabrielli said.  

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