Repsol could float Brazil unit to raise funds

Spanish oil group Repsol (REP.MC) may tap the stock market with its Brazilian unit to help finance an expected $10 billion plus in oil exploration in Brazil in the next decade, its president said on Saturday.

"There are various options -- find new partners, sell a project, float the Brazilian division on the stock market, or some kind of agreement with Petrobras," Antonio Brufau said after meeting Brazilian state oil firm Petrobras (PBR.N) (PETR4.SA) president Jose Sergio Gabrielli in Rio de Janeiro.

Repsol is among Petrobras' foreign partners in offshore "subsalt" fields, thought to contain at least 50 billion barrels of light crude, which are among the world's biggest recent finds.

The company has a presence in 21 exploration blocks in Brazil and values its Brazil operations at $6 billion.

Repsol is a partner in the Guara and Carioca subsalt fields, both operated by Petrobras.

Brufau said Repsol's 2010 Brazilian investment would be between $380-400 million, and the company might take part in auctions for other subsalt fields.

"For the next three to four years it's just exploration. When we get to developing the fields we will need billions of dollars," he said, adding that $10 billion over the next 10-12 years was a realistic figure.

President Luiz Inacio Lula da Silva in late August proposed a legislative framework to develop the huge reserves under a deep layer of ocean salt that could transform Brazil into one of the world's leading petroleum exporters.

The bills, which would make Petrobras the sole operator of new subsalt oil fields, are making their way through Congress.

"For new concessions, we'll have to evaluate thoroughly the new contracts, the new taxes to see whether a company the size of Repsol will be interested," Brufau said.

He added that it would be difficult for Repsol to expand its refinery investment in Brazil because of Petrobras' dominant position.

"We prefer Spain, Peru and Argentina where we are integrated with the distribution," he said. Repsol has a partnership with Petrobras in a refinery in the southern state of Rio Grande do Sul and Brufau said he discussed the project's future with Gabrielli.

"We're talking about the possibility of investment, whether it will be solely Petrobras, solely Repsol or both companies under different conditions," he said.

[Source: Reuters, Rio de Janeiro, 14Nov09]

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