Despite Strike, Brazil Petrobras Sets Output Record In March

Brazilian state-run energy giant Petrobras (PBR) shrugged off a five-day strike in March to set a fresh monthly record for domestic oil production.

Petrobras said Friday that domestic oil production advanced 2.7% in March to a record average of 1.992 million barrels a day. That topped the previous record of 1.940 million barrels a day set in February.

The record-setting performance came despite a five-day strike in late March, with oil workers at sites across the country walking off the job to protest working conditions. Petrobras said at the time that the stoppage had little effect on production, despite claims to the contrary by union officials.

Petrobras has installed several new platforms at offshore fields in recent months, with at least two additional platforms scheduled to come onstream in the near future. That likely means March's record output will not be the last of the year.

Initial long-term testing at the country's major offshore field - the Santos Basin's Tupi - is expected to start May 1. The "BW Peace" floating production, storage and offloading vessel, or FPSO, is expected to pump about 30,000 barrels a day from the field.

In November 2007, Petrobras estimated Tupi had recoverable reserves of between 5 billion and 8 billion barrels of oil equivalent, or BOE.

Meanwhile, the "Cidade de Sao Mateus" FPSO will be installed at a field in the Espirito Santo Basin later this year.

Petrobras' first-quarter output performance has been fueled by production at the P-51, P-53 and P-53 platforms, as well as the FPSO "Cidade de Niteroi." Fresh wells have been hooked up to the new platforms as ramp-up procedures bring them up to full capacity, Petrobras said.

The new platforms are primarily installed in the Campos Basin, where more than 85% of Brazil's crude oil is produced.

The increased domestic output has offset a slide in Petrobras' international operations, where production has trended downward in recent months. It's still unclear whether Petrobras' share of the new Akpo field in Nigeria, which started producing in March, will be enough to offset the decreases.

Petrobras holds an 11% stake in Akpo, which is operated by France's Total SA (TOT). Akpo is expected to produce about 175,000 barrels of crude a day by mid-2009.

Petrobras' international oil production slipped in March to a daily average output of 126,200 barrels a day. That was down from 127,800 barrels a day in February. Natural gas output from operations abroad also slid to 16.4 million cubic meters in March, down from 16.9 million cubic meters in February.

Petrobras shares reacted positively to the production figures, rising 1.2% to 29.63 Brazilian reals ($13.49) as of 1700 GMT on the Sao Paulo Stock Exchange. The shares, however, underperformed the broader market as measured by the Ibovespa stocks index, which was 2.1% higher at 46,771 points.

-By Jeff Fick, Dow Jones Newswires; 55-21-2586-6085; jeff.fick@dowjones.com