World Energy Outlook 2006

Petrobras’s investments is to improve the quality of oil products. New
legislation requires sulphur in diesel/gasoline to be below 50 parts per million
(ppm). Most of Petrobras’s refineries are not designed to process heavy crude
oil, which accounts for most of Brazilian crude oil production. Petrobras plans
to invest $14.2 billion from 2007 to 2011 to expand and modernise its
refineries and to add value to its products. Some 31% of this investment will
be to improve the quality of diesel and gasoline, 26% to improve conversion
and the rest to expand and overhaul existing refinery units. 8 Petrobras is
planning to build two new refineries, one in Rio de Janeiro State and another
in Pernambuco, in the northeast, in association with PVDSA, the Venezuelan
state-owned oil company. These are expected to come on line in 2012.
Natural Gas
Resources and Reserves
Proven natural gas reserves at the end of 2005 were 306 bcm (Cedigaz, 2006).
The United States Geological Survey estimates that undiscovered gas reserves
are 5 500 bcm, more than 15 times proven reserves (USGS, 2000). The
Santos and Campos basins have the largest reserves with about 37%, followed
by São Paulo with about 24% and Amazonas with about 15%. About twothirds
of the gas reserves are located offshore, usually as associated gas. In 2003,
Petrobras announced the discovery of 419 bcm of new reserves in the offshore
Santos basin in the southeast, but only 70 bcm has as yet been certified as
proven.
Until recently, natural gas was produced solely as a by-product of oil and about
30% was reinjected or flared. Petrobras plans to increase investment to
accelerate the development of Brazil’s domestic natural gas resources,
especially from the Santos basin, in order to supply the large and rapidly
growing market of the southeast. In the seventh licensing round in 2005, about
90% of the blocks in new onshore exploratory areas which were thought to be
gas-prone were awarded. To reduce the country’s dependence on imported
Bolivian gas, the government recently requested a 30% increase in the number
of gas-prone exploration blocks to be offered at the eighth bidding round,
scheduled for November 2006. This round includes the Espírito Santo and
Santos basins as well as the unexplored offshore basins of Curumuxatiba, Pará-
Maranhão and Ribeirinhas, in the country’s northeastern region. The Campos
basin was excluded from this round.
8. Speech by Jose Sergio Gabrielli de Azevedo, President and CEO of Petrobras, “Business Plan 2007-
2011”, 5 July 2006.
Chapter 16 - Focus on Brazil 471
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