Petrobras March oil, gas output up 2.6 pct yr/yr; Q1 at 5-yr low

RIO DE JANEIRO/SAO PAULO Fri May 2, 2014 12:53pm EDT

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RIO DE JANEIRO/SAO PAULO May 2 (Reuters) - Oil and natural gas output at Brazil's state-run oil company Petroleo Brasileiro SA rose 2.6 percent in March from a year earlier as long-delayed offshore fields came on line, the company said on Friday.

It was only the third time in two years that monthly output rose over the same month in the previous year. First-quarter output was still the lowest since 2009 and 0.78 percent lower than the first three months of 2013, the company said in a statement.

Petrobras' March output in Brazil and abroad averaged 2.55 million barrels per day of oil and equivalent natural gas (boepd) compared with 2.49 million boepd a year earlier. March output was 0.68 percent greater than in February.

Rising output from new offshore "subsalt" fields south of Rio de Janeiro explained March's production increase, Petrobras said. Subsalt refers to oil trapped deep beneath the seabed by a thick salt layer. Production would have been higher if Petrobras was not forced to retire an ageing production ship and conduct maintenance on several older systems.

Despite discovering some of the world's largest new oil resources south of Rio de Janeiro starting in 2007 and investing more than $40 billion a year for the past five years, Petrobras output is stuck at levels first reached in 2008.

Petrobras has seen many of its new production systems fall years behind schedule while output from giant oil fields in the Campos Basin northeast of Rio de Janeiro decline. The company, after union safety complaints, was also forced by the government to shut ageing platforms for maintenance.

Petrobras said it still expects to increase output 7.5 percent, plus or minus 1 percentage point, in 2014 as delayed systems finally start operations.

If it succeeds, it will be one of the biggest annual output gains in the company's history. But even if it does reach its target, average daily production will still fall short of the company's record 2.73 million boepd produced in January 2012. (Reporting by Jeb Blount; Editing by Marguerita Choy)

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