Petrobras expects to be world oil major by 2020: Official

March 25th, 2009 - 3:21 pm ICT by IANS  

Rio de Janeiro, March 25 (EFE) The CEO of Brazil’s Petrobras has said that the state-controlled firm will be one of the world’s largest oil companies by 2020.
It intends to produce 5.7 million barrels per day (bpd), or more than double its current output of 2.5 million bpd.

“Brazil in 2020 will produce more than half of what Saudi Arabia or Russia produces today,” Jose Sergio Gabrielli told the Senate’s economic affairs committee.

According to forecasts, Petrobras could end this year with production of 2.8 million bpd and that output may increase to as much as 3.7 million bpd by 2013 and 5.8 million bpd by 2020.

He said those projections are based on previously discovered reserves and do not depend on new finds.

Gabrielli said production in the massive, offshore “pre-salt” region, which is not yet being exploited, will reach 1.8 million bpd in a decade, or more than 65 percent of Petrobras’ current output.

The pre-salt area - so-named because the deposits lie far below the ocean floor under a thick layer of salt - could hold as much as 80 billion barrels of light oil and potentially transform the South American country into a major exporter of crude and derivatives, although experts say production will be challenging and very expensive.

Those finds could eventually lead to a nearly six-fold increase in Brazil’s current proven reserves of 14 billion barrels.

Gabrielli acknowledged that the true size of the discovered reserves will not be known until long-term well tests that begin May 1 on the Tupi field - the first to be explored in that region - are concluded.

He said that although Petrobras has the requisite technology to exploit the pre-salt reserves, the company needs more geological knowledge of the region and must still negotiate the necessary financing.

“The pre-salt doesn’t have big technological problems. What we’re lacking is geological knowledge and the only way we can acquire it is through production and long-term testing,” Gabrielli said.

According to the CEO, the $174 billion that the company plans to invest between 2009 and 2013 will mainly be obtained through loans from oil consumer countries, such as China.

“We’re going to increase our debt so we can increase investment. The cost of the debt is less than the return on the investment we’ll make over the long term. From our point of view, this is something that’s very profitable and justifiable,” Gabrielli said.

According to the CEO, the company’s investments through 2013 will create close to 243,000 new direct and indirect jobs in Brazil.

He said that, despite the global economic crisis and the steep drop in oil prices since last summer’s record highs, most of the world’s oil companies have maintained their same level of investment.

“The world’s going to keep moving by car, by plane, by bus and the people will continue to need petrol. The crisis will pass and the growing demand for oil is not going to stop,” he said.

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