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Petrobras Can Develop Subsea Reserves At $45/Barrel

09 March 2010

At oil prices of $45 or more, Brazil's plans to exploit the huge deep sea resources off its coast can be profitable, according to Jose Sergio Gabrielli de Azevedo, CEO of Brazilian oil company Petrobras.

He told IHS CERAWeek in Houston today that Petrobras anticipates nearly doubling its oil output by 2020, up 1.8 million barrels per day to 3.9 million barrels total. Some will come from current fields and some from the "presalt" reserves off Brazil's Atlantic coast, which require costly deep sea drilling. However, all 13 wells so far have hit oil. A well costs $120 million to drill, he said, and the company anticipates spending a total of $111 billion total in developing its resources.

Gabrielli de Azevedo said the plans would remain economic until oil dropped "below $45" a barrel. He said he would not specify how far below.

Brazil's government is in the process of authorizing state-owned Petrobras to sell shares on the open market. The country is also changing historic policy to invite international oil companies to bid to participate in developing the new presalt reserves, working with Petrobras. But Petrobras is expanding its bets beyond oil and looking at expanded investment in ethanol and biofuels.