Brazil's Petrobrás To
Develop Deep-Water Fields

The discovery of a huge new oil and gas field off the southern coast of Rio de Janiero last September has increased the likelihood that the state oil company, Petrobrás, will concentrate on deep-water exploration and development in the future.

Petrobrás' new president, Henri Philippe Reichstul said the company has a strong advantage in this field, as it has long been at the cutting edge of technological advances in offshore exploration and production. The company holds 9 of the 13 records for deep-water oil production set since 1977. Its Roncador well, at 1,853m below sea level, is the current world record holder.

In an article in a Sao Paulo newspaper last September, Reichstul argues that the company should concentrate its resources on what it does best. Almost 90% of Petrobrás' oil production comes from the Campos basin, off the coast of the northern Rio state, and much of the remainder comes from other deep-water fields.

Petrobrás produces about 1.19m barrels per day of crude (almost 12 percent more than a year ago), and imports a further 500,000 barrels per day (bpd) to satisfy domestic demand. But the company's own target for the year, of 1.3m bpd, will not be reached, and this deficit helps to explain the government's increasing determination to switch to natural gas as the fuel for power-generation and operating factories.

The Santos field, announced with great fanfare by Brazil's President Fernando Henrique Cardoso, is about 165km south-east of Rio, at a depth of 1,600m. It has proven reserves of up to 700m barrels of high quality light crude, and should come on stream within 18 months, at the rate of 100,000bpd.

The company has said it will raise the finance abroad for developing the field, but has rejected the possibility of an association agreement with foreign companies -which is now permissible under legislation ending the state oil monopoly.
The national oil agency, ANP, announced last October that 23 new oilfields, 13 of them offshore, in 10 different states are to be auctioned off to the private sector. Bidding is expected to take place in March-April this year. ANP hopes medium-sized Brazilian companies will lead the bidding.

Last October, 12 contracts were signed as a result of the first round of bidding, with international giants including YPF-Repsol, Agip Esso, Texaco, Unocal, BP, Shell and Amerada Hess paying more than US$150 million for drilling rights.

Executive Time "Online" also has a printed version which is available throughout the Caribbean and some selected North American cities.