Brazil Expands Investment in Offshore Drilling Projects

Brazil Expands Investment in Offshore Drilling Projects, by Andrew Downie
TNYT, January 24, 2009

SÃO PAULO, Brazil — Brazil’s state-controlled oil company, Petrobras, announced a crisis-busting investment plan Friday to spend more than $174 billion over the next five years, much of it for prodigious deep-water oil and gas exploration.

The investment covers the 2009-2013 period and represents a rise of 55 percent over the $112.4 billion the company had vowed to spend on development between 2008 and 2012.

This investment is “very robust and very important for the continuity of Petrobras’s growth,” José Sergio Gabrielli, the company’s chief executive, told reporters Friday at a news conference in Rio de Janeiro.

Petrobras, whose full name is Petróleo Brasileiro, had promised to unveil its spending plans in September but delayed the announcement several times because of the world’s financial turmoil.

In 2007 and 2008, Petrobras and partners including Repsol YPF of Spain and the BG Group of Britain discovered vast deposits of oil under more than 4,000 meters of water, rock and salt.

Although the finds are at previously untapped depths and will be costly to extract, they hold an estimated 8 billion to 12 billion barrels of oil, according to Petrobras figures. Company officials and oil experts say that other reserves of that size could be nearby.

One of the finds alone, named the Tupi, holds the equivalent of 5 billion to 8 billion barrels of light crude oil and is the world’s biggest new field since a 12-billion-barrel find in Kazakhstan in 2000.

President Luiz Inácio Lula da Silva of Brazil has said repeatedly that developing these oil reserves is vital to the country’s future, and Petrobras has set aside $28 billion to that end.

In all, new drilling could produce 219,000 barrels a day by 2013, 582,000 barrels a day by 2015 and 1.82 million barrels a day by 2020, he predicted.

Natural gas extraction would rise from 7 million cubic meters a day in 2013 to 40 million a day in 2020, the company added.

Petrobras produced a daily average of 2.18 million barrels of oil and gas last year.