Brazil oil company to invest $236.7 billion

SAO PAULO (AP) -- Brazil's state-run oil company said Tuesday it will invest $236.7 billion from 2013-2017, with most of the amount earmarked for exploration and production.

Petrobras said in a conference call with investors and analysts Petrobras that $147.5 billion, or 62 percent of the total, will be spent on exploration and production over the next five years.

Petrobras said $64.8 billion will be spent on refining, while $9.9 billion will go for natural gas and energy projects.

It said that daily oil production is expected to rise from 2 million barrels a day in 2013 to 2.75 million barrels by the end of 2017.

Petrobras said that most projects deep below the ocean floor in the so-called pre-salt formation on Brazil's continental shelf will start up between 2016 and 2017, "leading to production growth acceleration." It added that pre-salt production will account for 35 percent of total output in 2017.

Brazil has discovered billions of barrels of oil in offshore fields over the past few years, mostly in deep, pre-salt fields off its southeastern coast.

Most of the oil deposits lie more than a mile below the ocean's surface and under an additional 2.5 miles of earth and salt. Experts have estimated the area could hold as much as 55 billion barrels.

On Monday, the Supreme Court temporarily suspended the enactment of a new law that cuts royalties to producing states and threatens Rio de Janeiro's ability to host the 2016 Olympics.

The full court is expected to take up the matter next month.

Supreme Court Justice Carmen Lucia suspended the law after the country's top oil producers, Rio de Janeiro, Espirito Santo and Sao Paulo states, last week filed appeals against the law with the Supreme Court, claiming it was unconstitutional because it breaches existing production contracts.

The law that went into effect on Friday gives a greater share of royalty revenues from Brazil's vast oil fields to non-producing states.

The new law shares oil royalties, from existing and future drilling and production concessions, more evenly among all of Brazil's 27 states.

Officials in Rio de Janeiro, the largest producing state, have said the law will deprive Rio of $1.7 billion in 2013 alone, endangering preparations for the 2014 World Cup and the 2016 Olympics.

Rio state Gov. Sergio Cabral said the law would bankrupt the state and many of its municipal governments, 87 percent of which depend on oil-generated revenues.

The Espirito Santo governor, Renato Casagrande, has said his state stands to lose more than 10 billion reals ($5 billion) over the next seven years.