23-11-05 Brazil's government-controlled oil firm, Petroleo Brasileiro, or Petrobras, will invest $ 65 mm to boost production from block X in northern Peru, a Petrobras official said.
"By the end of this year we will have drilled 51 wells in the block. The idea is to drill slightly more next year," said Pedro Grijalba, general manager of Petrobras Energia Peru.

According to the Petrobras official, the company invested $ 51 mm in block X this year. Block X currently produces an average 12,900 bpd, and this should rise to 13,500 bpd in 2006, Grijalba said.
Grijalba underscored that the field is considered "marginal" as it began operating in 1914. Depleted reserves means oil extraction from marginal fields is often more complicated. To counter this, Petrobras Energia next year plans to bring state-of-the-art automatic drilling equipment to increase efficiency and decrease any risk of accidents, he said.

The X block investment is part of a more extensive program undertaken by the company in Peru. Petrobras operates several blocks in the country and has its eye on new areas, Grijalba said. Petrobras' growing interest is linked to attractive contractual conditions in Peru, he said.
"Petrobras has confidence in the economic and contractual conditions," he said. Those conditions combined with the fact that the giant Camisea natural gas project is up and running "make the country attractive," he said.

Camisea, a joint venture of Dallas-based Hunt Oil, South Korea's SK Corp. and Spanish-Argentine company Repsol-YPF, came on-stream in mid-2004 and has significantly increased Peru's hydrocarbon production. Petrobras recently signed an exploration and production contract for block 58 in Peru's south-eastern jungle region, near Camisea.
"We will enter block 58 for the first time on Dec. 14 in order to contact the stakeholders," Grijalba said, referring to local communities in the area.

Petrobras is currently examining existing seismic data from the block, and if that proves sufficient, and the company receives environmental approval, it could begin drilling in 2006, he said.
"Our idea is to drill as soon as possible," he said. Drilling one well in the block will cost between $ 20 mm and $ 30 mm, he said.

The success of the Camisea project has prompted a number of companies to show renewed interest in Peru. They want to increase reserves in order to supply a proposed energy loop in which gas from Peru could flow via pipelines to Chile, allowing energy resources to then be shared among other South American nations, including Argentina and Brazil.
Peru currently has 11.5 tcf of natural gas reserves, including the gas from Camisea's block 88. However, the country is first committed to supplying the domestic market and Peru LNG Co., a consortium that hopes to export liquefied natural gas later this decade to Mexico and other North American markets.

Petrobras' other assets in Peru include a stake in block 57, also near Camisea, and are operated by Repsol-YPF, as well as a stake in block 103in northern Peru, operated by US-based Occidental Petroleum.
The Brazilian company was recently awarded two new contracts by Perupetro, the Peruvian government's licensing agency, and is awaiting a government decree to be published to start work. The first is for block 110, north of Camisea and the second is for block 112, in the Maranon basin, in northern Peru. Finally, it is negotiating with Perupetro to sign a contract for block 117, which lies in northern Peru near the Ecuadorian and Colombian borders.