Brazilian president endorses Petrobras's investment plans

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Feb. 5 -- Brazilian President Luiz Inacio Lula da Silva, endorsing statements by officials of state-run Petroleo Brasileiro SA (Petrobras), said his country will fully implement projects laid out in the firm's 2009-13 business plan.

Lula's remarks, coming amid journalists' questions over changes in Brazil's oil and gas law, reiterated earlier comments by Petrobras Pres. Jose Sergio Gabrielli de Azevedo.

"We will implement upwards of 500 projects, ensuring investments and generating jobs at the lowest possible cost," Gabrielli said, referring to the company's 2009-13 business plan announced last month (OGJ, Jan. 26, 2009, P. 27).

"The preparation of the plan took the prices that were in effect in the last quarter of 2008 into account, in a scenario that was quite different from the one we currently have," Gabrielli said. "It is not feasible for any company to keep prices at the same levels as in 2008. The economy has changed."

He also said Petrobras would initiate oil production in May from giant Tupi field in the offshore Santos basin.

Lula's statement coincided with a Petrobras announcement that it would start long-term tests at Tupi field in April, a delay of a month in the tests, which originally were scheduled to begin as early as March.

The delay was created by Brazil's environmental institute Ibama which just this week cleared Petrobras to proceed with the long-term Tupi field tests, which are to be conducted by the Cidade de Sao Vicente platform.

Despite the delay at Tupi, Petrobras said it expects to begin production of crude oil at Jabuti field in the offshore Campos basin by the end of the month or the beginning of March when it deploys the 100,000-b/d floating production, storage, and offloading vessel, Cidade de Niteroi, to the field.

Meanwhile, a government panel studying possible changes to Brazil's oil laws was scheduled to present its proposals to Lula on Feb. 4, according to the country's mines and energy minister.

Minister Edison Lobao last week told the Noticias Financieras newspaper that the Brazilian government has to decide among five different regulatory models for the exploration of oil and gas in the subsalt areas.

According to Lobao, the definitive model will be announced in March, about a month after the conclusion of the interministerial studies and proposal approval by the Brazilian president.

Contact Eric Watkins at hippalus@yahoo.com.

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