Mexilhao development talks in final stage

Peter Howard Wertheim
OGJ Correspondent

RIO DE JANEIRO, Nov. 18 -- Brazil's state-owned Petroleo Brasileiro SA (Petrobras) is in the final stages of negotiations with Spain's Repsol YPF SA for development of giant Mexilhao gas-condensate field on Block BS-400 in the Santos basin off Brazil.

A Petrobras official told OGJ that the two companies have a confidentiality agreement and are not disclosing their plans until a definitive development program can be announced.

Petrobras discovered Mexilhao field in 2003 with its 1-SPS-35 exploratory well, drilled by the Alaskan Star semisubmersible in 1,591 ft of water (OGJ Online, May 12, 2003). It is estimated to contain 2.54 tcf of natural gas.

Francisco Nepomuceno, Petrobras's exploration and production manager said the field will cost about $1.9 billion to develop. At last report, the company planned to bring the field into production with a fixed production platform capable of handling 529.7 MMcfd of gas. It has said the field is expected to commence operations in mid-2008.

Nepomuceno also said plans call for construction of a gas processing facility in northern Sao Paulo state at Caraguatatuba at a cost of about $300 million, to which gas would flow through a subsea pipeline from the production platform. In addition, he said that the company intends to bring into production 635.7 MMcfd of gas from adjacent Block BS-500, which lies in deeper waters of the Santos basin and would require two or three production platforms.

Nepomuceno said Petrobras believes the Santos basin contains about 14.8 tcf of natural gas and plans to carry out exploratory drilling on at least 74 of the blocks.

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