This excerpt taken from the PBR 6-K filed May 18, 2007.
Exploration agreement for the Portuguese Sea
(Rio de Janeiro, May 18, 2007). PETRÓLEO BRASILEIRO S/A - PETROBRAS, [Bovespa: PETR3/PETR4, NYSE: PBR/PBRA, Latibex: XPBR/XPBRA, BCBA: APBR/APBRA], a Brazilian international energy company, announces that it signed an agreement in Lisbon today, with Portuguese corporations Galp Energia and Partex, for oil exploration and production in four blocks in the Lusitaniana Basin, off the coast of Portugal, to the north of Lisbon. With a 50% stake, Petrobras will be the projects operator. Galp Energia and Partex, meanwhile, will hold 30% and 20% interests, respectively. This will be the first exploration and production activity ever to be undertaken off the Portuguese coast. The agreement is the outcome of a memorandum of understanding (MOU) signed in August 2006.
Petrobras participation in this agreement is significant not only because it is the companys debut in a new exploratory frontier, but also because of expected positive results to be achieved in Portugal.
The Camarão, Amêijoa, Mexilhão, and Ostra blocks are located at water depths ranging from 200 to 3,000 meters and cover a total area of 12,000 square kilometers. The consortium that the three companies have formed is expected to concentrate on deepwater hydrocarbon prospecting.
The agreement foresees an 8-year exploration period, which will involve seismic acquisitions and exploratory well drilling. Initial investments are expected to range from $20 to $30 million, a figure which, depending on the studies technical assessments, may be even higher.
Negotiations between Petrobras, Galp, and Partex were expeditious due to the great interest the three companies have in the project. The first agreements were signed with the Portuguese government in March 2006. Galp and Partex already work in partnership with Petrobras in E&P agreements in Brazil.
The agreement fits clearly into Petrobras strategy of diversifying its international exploration portfolio in deepwaters where it possesses recognized tecnology.