CAPITAL: BRASILIA
MONETARY UNIT: REAL
REFINING CAPACITY: 1,918,081 B/CD
OIL PRODUCTION: 1,139,000 B/D
OIL RESERVES: 8.1 BILLION BBL
GAS RESERVES: 8.2 TCF

Brazil reached another oil production milestone when output totaled 1.53 million bbl on several individual days in late 2000.

Petrobras said production averaged 1,271,000 b/d in 2000, and the 2001 target was 1,420,000 b/d.

This left Brazil, the world's fifth most populous country, importing significant volumes to meet demand of around 2 million b/d. Most of the imports came from Venezuela and Argentina.

Privatization of Petrobras assets, begun in 1998, continued in 2000. The world's oil companies lined up to acquire explora-tion and production interests in several dozen offshore blocks centered on the Campos and Santos basins and stretching along Brazil's entire coast from Uruguay to French Guyana.

Petrobras-operated fields, though, were responsible for the rising oil production figures as operations were just starting on most of the outside-held and joint venture blocks.

Activity in Brazil's gas sector was even more positive than the oil results, with benefits accruing especially in southern Brazil from the Bolivia-Brazil gas pipeline. The coastal segment from Sao Paolo to Porto Alegre was completed and began service in mid-2000.

Upstream developments

Petrobras said production was up because of the start of new deepwater wells in giant Roncador and Marlim fields and exceptional performance of the company's producing entities.

Most of the exploration involved joint ventures with Petrobras. Here is a rundown of highlights by basin:

Campos. Kerr-McGee, TotalFinaElf, and other companies were to begin drilling in 2001.

Some of the action was to be in record water depths. Shell Brasil was awarded a block 106 miles offshore in 8,400-9,600 ft of water. World records were drilling in 9,000 ft of water and producing in 5,400 ft of water. Shell was to acquire and interpret 3D seismic data for the first 3 years.

Texaco, Odebrecht of Brazil, and Nissho Iwai-Inpex's FJPL were to explore a Campos block and develop adjacent Frade oil field 400 km northeast of Rio de Janeiro.

Petrobras reported a discovery of limited extent in the deepwater Campos basin and said it might stimulate activity in a new area off Espirito Santo state. Repsol-YPF got a 10% interest in giant Albacora Leste field in an asset swap with Petrobras.

Camamu-Almada. Brazilian firms Queiroz Galvao and Petroserv were to develop Block BCAM-40 off Bahia state.

Cumuruxatiba. Petrobras and Chevron were starting exploration on two blocks.

Foz do Amazonas. A group led by BP PLC was to drill two offshore wells in 2001. Esso Brasileira operates another block in the basin.

Parana. A Coastal Corp. unit made a gas discovery late in 2000 on a 6,520 sq km onshore block.

Pelotas. Esso Brasileira was to explore a block on the continental shelf off Rio Grande do Sul state.

Potiguar/Ceara. Unocal and El Paso acquired exploration and producing interests in the Pescada-Arabaiana project in Potiguar, at 110,000 b/d of oil and 100 MMcfd of gas Brazil's second largest hydrocarbon producing basin.

Enterprise Oil acquired an interest in a Ceara block with unexplored potential for large discoveries in deepwater turbidites.

Santos. BG PLC operated three blocks in the deepwater part of the basin. Naftex/Coplex and others were to explore other blocks and develop Coral and Estrela do Mar oil fields.

Sergipe-Alagoas. Devon Energy Corp. and Chile's state Sipetrol were to spud a wildcat on an offshore block initially licensed by PennzEnergy, which Devon acquired.

Processing activity

When Petrobras's oil production topped 2 million b/d, Brazil was expected to attract new refineries through foreign investment.

Brazil's two private refineries together processed only 30,000 b/d in 2000, but new ones could be proposed by 2005, the head of the National Petroleum Agency (ANP) predicted.

The federal government was pressuring Petrobras to sign partnerships with the private sector in refining to diminish the company's hegemony in the refining sector.

Most of Petrobras's refineries were being adapted to run more Campos basin heavy oil as Petrobras worked to cut refining costs to 80¢/bbl by 2005 from $1.08/bbl in 2000.