Petrobras Says No Short-Term Decision on Peru's Block 58

LIMA (Dow Jones), Dec. 11, 2009

Brazil's Petroleo Brasileiro SA, or Petrobras, doesn't expect to have extensive information on reserves in Block 58 until 2012, company President Jose Sergio Gabrielli said Thursday.

The company plans to carry out two exploratory drilling wells next year, and each drilling effort will take about six months, company officials said at a press conference.

"Peru has good potential for gas, but we need to do more drilling to quantify what we have," Petrobras Peru General Manager Pedro Grijalba said.

Peruvian government officials said last month that Petrobras has confirmed between one trillion and 1.5 trillion cubic feet of gas in Block 58. President Alan Garcia had said that gas in that block could reach up to five trillion cubic feet.

At the press conference at Petrobras' offices in Lima, company officials were much more cautious.

The company has so far drilled in only one of the structures in Block 58.

Gabrielli did say that Petrobras is continuing with ongoing drilling programs and that "probably more structures will appear."

Block 58 is located in southern Peru, next to block 88, known as Camisea, where companies are extracting gas.

Petrobras also earlier expressed interest in developing a petrochemical industry to make fertilizers in Peru to take advantage of natural gas coming from the Camisea fields.

"We have to see the volumes of the gas to see whether there are economic possibilities for petrochemicals," Gabrielli said Thursday.

Petrobras operates Block X in northern Peru, and Grijalba said that production there is expected to increase next year to 14,500 or 15,000 barrels a day of oil, from the about 13,500 barrels a day currently produced.  

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