Chevron on schedule for Frade start-up, eyes more

RIO DE JANEIRO, March 18 (Reuters) - U.S. oil major Chevron Corp (CVX.N) is on schedule to start crude output at its Frade field off Brazil's coast at the start of next year and seeks to pry open two other fields between 2010 and 2012.

Daniel Rocha, head of Chevron Brasil, said on Tuesday during the Latin Upstream conference in Rio de Janeiro that production at Frade, in which Chevron has a 51.7 percent stake, should start in January after a floating production, storage and offloading (FPSO) unit arrives.

"The project is in a fairly advanced stage. An FPSO will be converted and come to Brazil before the end of the year and we'll start production at the start of next year," he told reporters.

Chevron expects to produce 20,000 barrels per day at Frade in the initial phase in 2009 and then gradually raise the output of heavy oil averaging 18 on the API grade to 80,000 bpd in 2011. Frade has about 250 million barrels of gross expected reserves.

Brazil's state oil company, Petrobras, is Chevron's partner in Frade and some other exploration projects in Brazil, which is one of the key areas of oil output growth in the Americas.

Rocha also said Chevron and Petrobras would decide by mid-2008 on the investment needed to develop the offshore fields of Papa-Terra and Maromba.

"If everything runs well in this environment of quite a few challenges, we estimate that in 2010 we'd start producing on the first field and in 2011-2012 on the second field," he said.

Chevron Brazil expects to invest $1.5 billion in the next three years.

Rocha said the company was not disheartened by planned changes in Brazil's oil sector regulatory framework, with possible tax hikes and fewer available high-potential areas.

Brazil is studying regulatory changes after a huge discovery in the subsalt cluster on the Tupi field last year -- potentially the world's biggest deepwater find. Petrobras said Tupi contains between 5 billion and 8 billion barrels of light oil and gas.

When Chevron starts producing on Frade, it will join Royal Dutch Shell (RDSa.L), Repsol-YPF (REP.MC) and Devon Energy Corp (DVN.N) which are already pumping crude in Brazil. Dozens of other companies are looking for oil in Latin America's largest country. (Reporting by Denise Luna, writing by Andrei Khalip, editing by Matthew Lewis)