Petrobras to boost spending on oil field

Petroleo Brasileiro, Brazil’s state-controlled oil company, will spend $174.4 billion in the five years through 2013 to double output and develop the Americas’ largest oil field discovery in the last three decades.

Petrobras, as the Rio de Janeiro company is known, will spend 56% more than in the previous plan through 2012, and $28.6 billion this year, Chief Executive Jose Sergio Gabrielli said Friday.

Latin America’s biggest publicly traded company is increasing investment while rivals such as ConocoPhillips, the third-largest U.S. oil company, are cutting jobs and reducing spending plans after oil fell 68% from a record $147.27 a barrel July 11.

Petrobras, whose offshore Tupi field discovery announced in 2007 is bigger than Mexico’s Cantarell find in 1976, aims to boost oil and gas production to about 4.63 million barrels a day by 2015.

“The volumes of investments will have an important macroeconomic impact in Brazil,” Gabrielli said.

Petrobras’ plan to invest more in capital projects is part of Brazilian President Luiz Inacio Lula da Silva’s effort to maintain the nation’s economic growth. Brazil’s economy, the region’s largest, is forecast to expand 2.9% this year, compared with 5.2% in 2008, according to the median estimate of 16 economists surveyed by Bloomberg.

The company expects to increase oil and natural-gas output to 5.73 million barrels a day by 2020 and daily refining capacity in Brazil to 2.27 million barrels by 2013. Petrobras produced about 2.4 million barrels a day last year.

About $28 billion of the investment will go to developing the so-called pre-salt offshore oil fields, which include the Tupi discovery, which is estimated to hold 5 billion to 8 billion barrels of oil.

Petrobras may be able to produce oil from its pre-salt fields in a pilot program for less than $40 a barrel, the company has estimated. It aims to produce 219,000 barrels of oil a day from the pre-salt fields by 2013.