Brazilian regulators are forcing state-controlled Petroleo Brasileiro SA (PETR4) to shut production equipment more frequently for maintenance after BP Plc’s Gulf of Mexico oil spill, the company’s chief financial officer said.
Increased shutdowns and project delays contributed to slower gains in output in the second quarter, CFO Almir Barbassa told investors during a conference call today. The Rio de Janeiro-based company’s production rose 2 percent in the first half, its slowest growth since 2007.
“There’s been an impact from the Gulf of Mexico, authorities are calling for stoppages in situations where it didn’t happen before,” Barbassa said. “Today we halt production in much less critical situations.”
Petrobras aims to increase domestic production about 5 percent this year to an average of 2.1 million barrels of oil a day as it adds two offshore platforms and boosts output at Lula, Brazil’s largest discovery. A blowout at BP’s Macondo well in April 2010 has cost the company about $41 billion in charges.
Petrobras must add enough production to compensate for declining output at older fields and will likely fall short of its target even with the new platforms, said Adriano Pires, head of the Rio de Janeiro-based Brazilian Center for Infrastructure.
“I think that this will be impossible,” Pires said in a telephone interview from Rio de Janeiro. “I don’t think they will increase more than 1 or 2 percent.”
Petrobras fell 10 centavos, or 0.5 percent, to 20.66 reais in Sao Paulo at 1:10 p.m. New York time. The stock has dropped 24 percent this year, more than the 22 percent decline in Brazil’s benchmark Bovespa index.
Petrobras is developing Lula and other deep-water fields at a time production wanes at its largest developments closer to shore in the Campos Basin, which supplies about 85 percent of Brazil’s production.
Output at Roncador, Petrobras’s largest producing field in Campos, fell 5 percent in the first six months of 2011 to 287,000 barrels a day in June, according to Brazil’s oil regulator. Petrobras has increased investments in these fields because it is more difficult to extract oil from dwindling deposits, Barbassa said.
Petrobras will test new technology later this year to separate water from oil on the ocean floor to improve output, he said. Oil wells often pump increasing volumes of water from reservoirs as the amount of oil depletes, reducing production.
Petrobras is also drilling deeper at the Campos Basin to find oil trapped below a layer of salt, which the company began to identify over the past decade as technology advanced.
Petrobras has at least 1.3 billion barrels of recoverable reserves locked in so-called pre-salt fields that are near existing platforms in Campos. Three of Brazil’s 10 most productive wells in June tapped pre-salt fields in the area.
Last month, Petrobras increased its long-term production target 19 percent to 6.4 million barrels a day of oil and natural gas in 2020 as the company develops the largest group of oil discoveries on Earth over the past five years.
Still, a policy requiring the producer to buy goods and services from local companies will stunt growth, Banco Safra has said in a research report to clients.
“The goals of local content often slow development because it reduces the possibility of bringing technology and people from outside,” Joao Felix, Schlumberger Ltd.’s vice president of technology and marketing for Latin America, said in an interview in June.
Petrobras is completing maintenance at some offshore units this month and will accelerate production during the fourth quarter, Eduardo Molinari, a production coordinator at Petrobras, said on today’s conference call.
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