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UPDATE 2-Petrobras output falls again in Oct, CEO sees upturn
November 26, 2012 / 2:11 PM / in 5 years

UPDATE 2-Petrobras output falls again in Oct, CEO sees upturn

* Total output fell 1.3 percent from year earlier

* “Surprising” subsalt output trimmed output fall -CEO

* CEO sees giant, new production systems in 2014-2016

RIO DE JANEIRO, Nov 26 (Reuters) - Brazilian state-led oil company Petrobras said Monday that year-on-year output of petroleum and natural gas had fallen for a fifth straight month in October as maintenance in the offshore Campos Basin slowed ambitious expansion plans.

During the month, Petrobras produced an average 2.58 million barrels of oil and natural gas equivalent a day (boepd) in Brazil and abroad, 1.3 percent less than 2.62 million boepd in October 2011, the Rio de Janeiro-based company said in a statement.

Production would have fallen more if not for “surprising” output from the company’s so-called subsalt areas south of Rio de Janeiro, Chief Executive Maria das Graças Foster told reporters in Sao Paulo Monday.

These giant fields are expected to produce 47 percent of Brazil’s output in 2020.

Petrobras’ production is falling even as the company moves ahead with a $237 billion, five-year investment plan, the world’s largest corporate spending program.

Under the plan Petrobras hopes to more than double output to 5.7 million boepd by 2020, making it one of the world’s three or four largest producers along with Russia, Saudi Arabia and the United States.

In addition to falling output, rising costs and a refusal by the government, Petrobras’ controlling shareholder, to let it raise domestic fuel prices in line with those of international crude helped lead to the company’s first loss in 13 years in the second quarter.


Petrobras’ domestic and international output of oil and natural gas was 4.4 percent greater than in September. While maintenance continues to limit output, several units completed repair work and returned to service in September.

The company also began output from a new production ship in the Parque das Baleias, or “Whale Park,” field in the Campos Basin.

Production of crude oil in Brazil was 1.94 million barrels per day (bpd), 2.5 percent less than a year earlier and 5.8 percent more than in September.

Chief Executive Officer Maria das Graças Foster has said Petrobras will raise domestic oil output to 2 million bpd by the end of the year. The company last produced more than 2 million bpd a day in Brazil in February.

Large production increases, though, are not expected until sometime in 2014 or 2015 when new production systems in the Santos Basin offshore subsalt area start ramping up output to replace declining production from the Campos Basin.

Output from giant subsalt areas purchased by Petrobras in a 2010 oil-for-stock swap with Brazil’s government will begin in July 2016, Foster said.

The areas, which include the Franco, Guará-Sul and Tupi-Nordeste prospects, were purchased with some of the proceeds of a $70 billion September 2010 share sale and are believed to be some of the largest oil accumulations discovered in the last two to three decades.

The areas are adjacent to existing Petrobras-led subsalt fields such as Lula and Cernambi that the Rio de Janeiro-based company is developing with partners such as Great Britain’s BG Group Plc, Spain’s Repsol SA and Portugal’s Galp Energia SGPS

Foster also said the floating oil production, storage and offloading ship, a converted oil tanker known as an FPSO, will start producing in the Tupi field in November 2014.

The Cidade da Ilhabela FPSO in the Sapinhoá field will produce its first oil in September 2014 she said.

Petrobras preferred shares, the company’s most-traded class of stock, fell 2.03 percent to 18.78 reais on the Sao Paulo BM&FBovespa exchange in afternoon trading. The benchmark Bovespa index of the most-traded stocks on the exchange were down 1.6 percent.

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