Aug. 1 (Bloomberg) -- Petroleo Brasileiro SA, Brazil's state-controlled oil company, plans to start crude production at the offshore Tupi field in the first quarter of next year.

The initial output will be between 20,000 and 30,000 barrels a day, Chief Executive Officer Jose Sergio Gabrielli said today in London. The company and partners will ramp up production at the pilot project to 100,000 barrels a day in 2010.

Rio de Janeiro-based Petrobras will boost investment in projects from its previous plan to spend $112 billion by 2012, Gabrielli said. It will order 28 new drilling rigs between 2013 and 2017.

``For sure the new plan has to be bigger than that,'' Gabrielli said in a television interview. ``We have to increase our debt, because the amount of money we need for capital expenditure will be very big.''

Petrobras plans to start crude extraction from an offshore field in the so-called pre-salt Campos Basin in September, Gabrielli said. At first 10,000 barrels a day will be pumped from the Jubarte field.

He said the company may be able to give oil and gas reserves estimates for the Campos Basin at the end of 2009. The producer will announce investment and borrowing plans in September or October. Brazil's National Petroleum Agency said on its Web site today Petrobras and Royal Dutch Shell Plc found traces of oil in an offshore well in Campos Basin.

Petrobras owns 65 percent of Tupi and operates the concession. Reading, U.K.-based BG Group Plc owns 25 percent and Lisbon-based Galp Energia SGPS SA owns 10 percent.

Petrobras is also planning to increase investment in oil refining and may increase debt, Gabrielli said. The company's current ratio of debt to equity is between 17 percent and 20 percent, and it is able to increase it as high as 35 percent, he said.

-- With reporting by Eduard Gismatullin. Editors: Amanda Jordan, Guy Collins

To contact the reporters on this story: Juan Pablo Spinetto in London at jspinetto@bloomberg.netAnthony DiPaola in Rome on adipaola@bloomberg.net

Last Updated: August 1, 2008 13:51 EDT