Petrobras’ Future Investments

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Researched by Industrialinfo.com (Sugar Land, Texas). Brazil’s state-owned petroleum company known as Petrobras (NYSE:PBR) will invest $12 billion in international operations between 2007 and 2011 as part of a business plan with an $87.1 billion total investment budget. See related article from Tuesday, July 11, 2006: Petrobras Increases Production and Exploration as Part of $87 Billion Plan. More specifically, Petrobras is also considering to develop projects together with countries such as Russia and Uruguay.

Petrobras in Russia

After a meeting held with Russian companies Gazprom (Moscow, Russia), Stroy Trangas, and Rosnef (Moscow, Russia) on July 3 and 4, 2006, Petrobras stated that it will consider cooperating with the Russian oil and gas companies in projects ranging from E&P to natural gas transport. Guilherme Estrella, Petrobras’s E&P director, met with the Russians leading a committee composed by officials from the state company's departments of gas and power, research, and new business development. Petrobras and the Russian companies will stay in contact and could embark on a joint deepwater and onshore oil and gas exploration, natural gas pipeline construction, underground natural gas storage, and even in liquefied natural gas (LNG) projects.

Petrobras in Uruguay

On July 5th, the ministers of Mines and Energy of Brazil, Silas Rondeau, and of Uruguay, Jorge Leptra, signed a memorandum of understanding to advance the energy integration processes between the two countries. The memorandum is a continuation of the previous agreements reached in the "Landmark Agreement on Regional Energy Complementing among the States that are part of Mercosur," signed in Montevideo on December 9 2005, and in the "General Energy Interconnection Agreement between Brazil and Uruguay" signed last March 16. The agreement is another step towards the energy integration of South America while at the same time, studies aiming at increasing the collaboration between the two countries in the oil exploration, production, refining, and in the natural gas areas were initiated between Petrobras and Ancap, Uruguay’s national oil company . There is a vast array of projects which will be develop between Brazil and Uruguay. Petrobras is planning to develop studies and negotiations with Ancap to increase conversion at the La Teja refinery, which has a processing capacity of 50,000 barrels of oil a day, in order to process Brazilian heavy oil.

The construction of a major 500-kV transmission line that will allow electricity exchange according to the need and capacity of both of the country’s electrical systems. The line, which has an estimated cost of $150 million, will be about 400 km long and it is planned to be finished within the 18 months after the construction has begun. Uruguay will bear the costs and be in charge of the project's technical and commercial management. Three members of each country will be part of an Electric Interconnection Work Group, which will examine the energy integration expansion between Brazil and Uruguay.

Petrobras’ Discovery of Crude in Ultra-deepwater

Petrobras, in association with the BG Group (NYSE: BRG) and Petrogal (Lisbon, Portugal),has found light crude in the ultra-deepwater BM-S-11 block in the Santos basin, one of the largest Brazilian sedimentary basins located entirely offshore in the southeastern part of the Brazilian continental margin covering 352,260 sq km.

The drill represents a breakthrough in Brazilian oil exploration given the well’s structure and the 2,000-meter salt mattress they had to go through. In 2000, Petrobras and its partners obtained the exploration concession license from a hydrocarbons regulator and started drilling at water depths of 2,140 meters at 250 kilometers from the coast in the 1-BRSA-396A-RJS well. The company will continue work to determine the overall size of the reserves.

Petrobras has strong development objectives to strengthen Brazil’s position especially after Brazil's achievements last April in the oil industry and Bolivia’s nationalization of its natural resources last May which further promoted a rise in international gas prices.

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