Petrobras, Chevron in Talks to Resume Output at Frade Field

Published Apr 29, 2013 2:56 PM by The Maritime Executive

* Chevron could restart field this week -Formigli

* Petrobras owns 30 pct of Frade Field, Chevron 52 pct

* Output at Petrobras expected to rise in 2nd half

(Reuters) - Renewed oil output at Chevron Corp's Frade Field in Brazil should boost production at partner Petrobras by as much as 5,000 barrels a day, helping limit declining flows at the state-run company because of maintenance, Petrobras officials said on Monday.

Chevron is in talks with Brazilian officials to restart output at the offshore field after a November 2011 oil spill and subsequent leaks led the company to stop all output in the area in March 2012. Frade was producing about 60,000 barrels a day at the time of the closure.

Output at Frade could begin as early as this week, said Jose Formigli, head of exploration and production at Petroleo Brasileiro SA, as Petrobras is formally known. Formigli spoke on Monday at events with investors and journalists to explain the company's first-quarter results, announced late Friday.

On April 8, Brazil's petroleum regulator, the ANP, gave Chevron approval to restart output on a limited basis and without water or gas injection to increase production volumes. Chevron is the field's operator and owns 52 percent of the field's output.

The ANP said Frade would likely produce about 20,000 barrels of oil a day under the rules. Petrobras, which owns 30 percent of the Frade field's output, expects an initial share of output of between 4,500 to 5,000 barrels a day, Formigli said.

This suggests total production from the field is likely to be about 16,700 barrels a day, or about 17 percent lower than the 20,000 boepd ANP estimate.

The remaining 18 percent of Frade output is owned by Frade Japão, a joint venture between Japanese trading houses Sojitz Corp and Inpex Corp.

Petrobras is seeking to increase output at a time when maintenance and declining production from its most important fields is crimping financial results.

First-quarter profit fell 17 percent in the first quarter from a year earlier, Petrobras said on Friday, blaming a decline in output, rising imports and fuel subsidies.

During the calls with investors and reporters on Monday, Petrobras also said that it expects oil output to remain steady through the middle of the year. By then, completed maintenance and the arrival of new production ships should start boosting output.

Production by the company of oil and natural gas in Brazil and abroad fell 4.38 percent to 2.49 million barrels a day in March, the second lowest monthly average in five years.

Petrobras expects to import 260,000 barrels of diesel fuel and gasoline a day through the end of the year, said Jose Carlos Cosenza, Petrobras' head of the refining and supply division.

Of that about 180,000 barrels a day, or 69 percent, will be diesel.