Don’t Expect Brazil’s Ultra-Deep Sea Oil Flowing Before 2013

Petrobras floating platform Sergio Gabrielli, the CEO of Brazil's state-controlled oil and gas multinational Petrobras said that he expects new ultra-deep-water finds to yield 100,000 barrels of oil a day by 2010 and announced the company would begin testing production in the fields next September 2, but he cautioned, "We don't expect the new fields to have a significant impact on oil production until 2013".

Gabrielli declined to estimate the size of the newly found reserves, which some geologists believe can hold as much as 55 billion barrels of oil, but he said Petrobras had the "biggest potential to grow of all major oil companies."

The company's Brazilian oil and gas reserves stood at 10.573 billion barrels of oil equivalent at the end of 2006, according to the measuring criteria used by the US Securities and Exchange Commission.

Analysts have said that if tests confirm the massive reserves, Brazil could become a major oil exporter. But the oil lies not only deep below the ocean's surface but also far below the ocean floor, below the Earth's salt layer, making it difficult and expensive to extract.

Earlier Friday, Petrobras executive Antonio Carlos Pinto said the company had spent US$ 1 billion on 20 exploratory oil wells since 2005 in the offshore area. But he added that the cost of drilling in the ultra-deep area off Rio de Janeiro's coast had dropped significantly since test drilling began.

Foreign correspondents were invited for a two day Petrobras forum, which began on Thursday, August 21, with the visit of platform P-51, which is in its final construction phase in Angra dos Reis. With investments in the order of US$ 830 million, P-51 is the first semi-submersible platform ever built in Brazil.

The platform is expected to set sail from the shipyard in September and begin operations late this year in the Marlim South field, in the Campos basin. The unit will be capable of processing and treating 180,000 barrels of oil and six million cubic meters of gas, in addition injecting approximately 45,000 cubic meters of water in the reservoir per day.

On Friday Gabrielli told the visiting journalists that "Petrobras is the only major oil company in the world that has 85% of its revenue coming from the domestic market." Therefore everything that happens in the Brazilian economy is very important to Petrobras, "and whatever happens at Petrobras is important for Brazil," he said.

Gabrielli went on to say Petrobras has an accelerated growth project with an annual target growth of 7% until 2015.

"This is essentially based on proved reserves, not taking the pre-salt discoveries into account" he added. Petrobras president also emphasized that "we have an investment program that may very well be one of the world largest."



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