Monday, June 21, 2010

Petrobras Sees 'no Impact' on Rig Rates From Gulf Oil Spill

(Bloomberg) -- Petroleo Brasileiro SA, Brazil's state-controlled oil producer, said it has seen "no impact" on rig rates from the U.S. ban on drilling in the Gulf of Mexico.

"If the moratorium is forever, it will certainly affect the drilling market, but if the moratorium takes six months to a year, it won't affect that much because those rigs are hired for a long term," Samir Passos Awad, head of Petrobras in the Netherlands, said today in an Oslo interview. "For the moment we're not seeing any rigs being available or rig rates going down" because of the moratorium, he said.

President Barack Obama in May extended a moratorium on deepwater drilling permits by six months and ordered a halt to 33 exploratory wells after the April 20 explosion on a Transocean rig leased to BP Plc caused the worst spill in U.S. history. The leak will reduce exploration costs in Brazil as rigs idled by the moratorium will lower rental rates, Jose Luis Villanueva, a director at Fitch Ratings, said on June 17.

"All the companies that are drilling in the Gulf, the big companies, have projects in West Africa, so they can move the rigs from the Gulf to Angola or Nigeria, if they don't have projects in Brazil," Awad said. "Petrobras is planning to build 28 rigs in Brazil for the coming years, so the plans are not counting on availability of rigs to come out of the moratorium, but if it happens we could accelerate some programs."

Production Delay

Petrobras would still consider going into projects with BP, with whom it owns a share in the Gulf of Mexico Tiber find, according to Awad. Petrobras operates the Cascade and the Chinook fields, which were scheduled to start this year with the floating production, storage and offloading vessel BW Pioneer at record depths.

"We were just about to bring into production Cascade and Chinook," Awad said. "This is now waiting for authorization from the MMS. It's a very sensitive issue and I'm afraid we're going to have to wait a little bit."

The Minerals Management Service is a U.S. agency that oversees offshore production.

Awad said that while Petrobras remains interested in the U.S. Gulf, future participation in any licensing rounds depends on what areas become available.

"The company is right now refocusing its work to Brazil," he said. "We're not leaving the international scenario, but we have a lot to do in Brazil."

Petrobras is spending as much as $224 billion through 2014 to boost production at oil fields including Tupi, the largest discovery in the Americas since Mexico Cantarell in 1976.

-- Editors: Jonas Bergman, Raj Rajendran

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