Petrobras to Increase Equipment Spending

Petroleo Brasileiro SA, Brazil's state-run oil company, will double its spending on drilling equipment to$7b this year, ahead of possible price hikes in an overheated international market, the Houston Chronicle reported. Petroleo Brasileiro SA also said it would offer details on its plans to invest $22.1b from 2007 through 2011 to develop new sources of natural gas amid rising domestic demand and a move by its largest supplier to hike prices. Petroleo Brasileiro SA also confirmed reports that the company will build a new refinery capable of processing 500,000 barrels of oil a day by 2014. Construction will likely begin in 2010, but the refinery's location has yet to be selected. Petrobras, which has 11 refineries in Brazil, invested earlier this year in a facility in the United States and is looking to purchase more abroad. Petrobras on July 31 also signed contracts with four Brazilian engineering companies that will build and operate six offshore oil-drilling platforms. The company plans to lease the platforms beginning in 2009 at a cost of $4.8b. Petrobras currently leases 23 offshore platforms and operates four of its own. Brazil produces about 1.8 million barrels a day of crude oil, more than 80 percent of it from offshore fields. (Source: Houston Chronicle)