September 6, 2018 / 9:35 PM / 3 months ago

Brazil Santos lifting costs could reach low of $5/barrel -Petrobras exec

RIO DE JANEIRO, Sept 6 (Reuters) - Lifting costs for the Santos basin in Brazil’s offshore pre-salt oil play should reach an all time low of $5 per barrel, but the timeline for reaching it will depend on the development of the transfer-of-rights area, an executive of Brazilian oil giant Petroleo Brasileiro told reporters on Wednesday.

Oil majors have plowed big money into Brazil, Latin America’s top producer, to lock in stakes to the offshore pre-salt layer, where billions of barrels of oil are trapped under a thick layer of salt.

The vastness of the resources helps reduce lifting costs, which have already slipped to $6 to $7 per barrel in the Santos basin’s Lula field, according to Joelson Falcao Mendes, Petrobras chief for oil production in ultra deepwaters.

The field, Brazil’s most productive, averages 879,000 barrels of oil per day, and is operated by Petrobras in a consortium with Royal Dutch Shell and Portugal’s Galp .

But reaching $5 in Santos will depend on the pace of development of the transfer-of-rights area, which was transferred by the government in 2010 to Petrobras to extract 5 billion barrels of oil and gas there.

However, the government and Petrobras are still squabbling over the value of the area, also located in the Santos basin.

Mendes, who was named to the committee negotiating the value of the area with the government, did not offer further details about how it would affect lifting costs. He spoke to reporters aboard the P-66 platform in the Lula field.

Mendes made the comments as white-capped waves rocked P-66, which began producing last year and has the capacity to process 150,000 barrels of oil daily.

However, Mendes said that the P-67 platform, which was scheduled to begin production between October and December of this year in the northern part of the Lula field, could be delayed into January.

He defended the time it took Petrobras to develop the logistically complex areas, noting that the consortium was finishing the development phase for Lula, which was discovered in 2006.

“If there hadn’t been some construction delays for the systems, the timings would be even better. But regardless, they are pretty impressive and extremely competitive internationally,” he said. (Reporting by Alexandra Alper Editing by Phil Berlowitz)

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