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Oil prices, which more than halved this year, must rebound to about $75 a barrel to maintain new investments in crude output and an adequate supply of energy to world markets, Brazil’s Energy Minister Edison Lobao said.
“Up to this point prices have been tolerated, but below where they are today the world runs the risk of undersupply,” Lobao said in an interview today in London. “We are of the conviction that $75 a barrel is very reasonable.”
Petroleo Brasileiro SA, Brazil’s state-controlled oil company, plans to invest an average of more than $22 billion a year through 2012 and has set $35 a barrel as a minimum price for development of new wells in its 2008-2012 investment plan.
Crude for January delivery fell 72 cents, or 2 percent, to $35.50 a barrel at 11:59 a.m. on the New York Mercantile Exchange. Futures touched $33.44, the lowest since April 2004.
“These prices won’t bankrupt Petrobras, but they are not good,” Lobao said.
Petrobras and its partners will need about $600 billion over several decades to develop the entire so-called pre-salt areas offshore, according to UBS AG. The area includes Tupi, a 5 billion to 8 billion barrel field announced last year. Tupi is the largest discovery in the Americas since 1976.
The Tupi cluster, which includes other fields, may contain 80 billion barrels of oil, enough for more than 10 years of U.S. consumption, Brazil’s energy agency chief Haroldo Lima has said.
The $75 a barrel figure has also been suggested by Saudi Arabia during the London meetings between the Organization of Petroleum Exporting Countries and other large oil-producing nations, Lobao said.
Investment Plan
Petrobras’ board will consider a new 2009-2013 investment plan at meetings today, according to a statement on the company’s Web site. Brazil’s government expects the company to maintain its investment levels, Lobao said.
“We don’t have any plans to reduce our investments,” Lobao said. “On the contrary, we have plans to maintain them.”
Yesterday, Dilma Rousseff, Petrobras chairwoman and chief of staff to Brazilian president Luiz Inacio Lula da Silva, said Petrobras will invest 40 billion reais ($16.8 billion) on expansion next year, 20 percent less than this year’s estimate. Her forecast didn’t include the pre-salt developments.
Lobao said a review of rules governing Brazil’s unleased pre-salt fields will be delivered to Lula in early January.
Lula will consider options to maintain the current license auction system, create a new state oil company to manage Brazil’s ownership of unleased areas or a “mixed” system that may include auctions or production sharing contracts, Lobao said.
Petrobras preferred shares, the company’s most-traded class of stock, fell 1 percent to 23.26 reais at 12:53 p.m. in Sao Paulo.
By Jeb Blount and Juan Pablo Spinetto
Source: Bloomberg (www.bloomberg.com) |
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