Petrobras Is Considering SBM for Brazil LNG Contracts (Update2)
By Fred Pals
July 4 (Bloomberg) -- Petroleo Brasileiro SA, Brazil's state oil company, is considering SBM Offshore NV to supply one or more floating liquefied natural gas facilities to help develop the Western Hemisphere's biggest oil find in three decades.
``We have to finish the evaluation and assessment of the current technologies and SBM is one of them and they have all the opportunities'' to get contracts, said Jose Sergio Gabrielli, chief executive officer of Petrobras, in a July 2 interview in Madrid. ``We are considering talks with everybody who has technology for floating LNG.''
SBM rose in Amsterdam trading for the first time in four days, advancing 2.9 percent to 22.49 euros, valuing the Schiedam, Netherlands-based company at 3.22 billion euros ($5.06 billion).
SBM's so-called floaters will be able to extract, liquefy and store gas from remote offshore sites, enabling the development of fields in regions where pipeline networks and onshore liquefaction plants aren't feasible. The company plans to supply floating facilities with a capacity of 2.5 million tons of LNG a year.
The Dutch field-services provider, the world's largest supplier of floating oil production platforms, has said it expects to receive a first order in late 2008 or early next year. Its competitors include Oslo-based BW Offshore Ltd. and Tokyo- based Modec Inc. Gabrielli declined to comment on which of the others are being considered.
`Conceptual Dialogue'
``We see Brazil as a market for floating LNG facilities,'' Sebastiaan de Ronde Bresser, an SBM spokesman, said by telephone. ``Currently, we have a dialogue on a conceptual level with Petrobras and we hope to supply them with facilities in the future.''
Petrobras, based in Rio de Janeiro, has found signs of oil deposits near its Tupi field, which alone contains as much as 8 billion barrels of recoverable oil equivalent, Gabrielli said at the World Petroleum Congress in Madrid.
``Today we have information about the areas and the indication of the existence of hydrocarbons,'' he said in an interview with Bloomberg Television. ``We're certain of a huge increase in reserves.'' Petrobras has about 13 billion barrels of proven reserves.
Discoveries near Rio de Janeiro and Sao Paulo, including Tupi, will at least triple Brazil's oil reserves, President Luiz Inacio Lula da Silva said in June. Tupi is located in the Santos Basin southeast of Sao Paulo.
Pre-Salt Reserves
The entire so-called pre-salt region may contain as much as 50 billion barrels of oil, according to Peter Wells, director of U.K. research company Neftex Petroleum Consultants Ltd. Tupi is about 80 percent crude and 20 percent gas and for each barrel of oil, there's 700 to 1,000 cubic feet of gas, according to Wells, a former Royal Dutch Shell Plc exploration manager.
Petrobras plans to start development of the Santos Basin with the traditional floating oil production and storage units that are supplied by SBM and competitors such as Modec, Gabrielli said. He said he doesn't yet know how many floating oil facilities his company will need.
The Brazilian producer has already leased about 80 percent of the world's deepest-drilling offshore rigs and plans to hire 14,000 engineers, geologists and drillers within the next three years, Gabrielli said in May.
The company announced plans to place orders with shipbuilders for 40 new drilling rigs and production platforms that will cost about $30 billion. Drilling at the Tupi field is expected for April 2009, Gabrielli confirmed.
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