PORTO DO RIO GRANDE, Brazil, Feb. 5 (UPI) -- An all-Brazilian heavy oil operation is under way with every stage of the extraction, output, storage and supply reported to have been conducted with local expertise.
Brazilian state oil company Petrobras and partners have been talking of achieving the feat for several years -- under the former presidency of Luiz Inacio Lula da Silva and as part of the current agenda of President Dilma Rousseff, who took office Jan. 1, 2011.
Delayed for several months and costlier than budgeted estimates, the P-63 floating production storage and offloading unit docked in the southern port of Rio Grande in preparation for the work of Petrobras and a consortium of companies to begin.
The FPSO will be able to store up 1.4 million barrels of extracted oil. Estimates suggest Petrobras and partners will produce up to 140,000 barrels a day of heavy oil.
Brazilian officials said it is the first energy project of its kind that has been completely executed by a national company from the initial to the final stages of exploration and production.
Another four months of preparatory work will be required before the project goes into full swing, officials said. July 2013 was mentioned as a start-up date but analysts said the project has had so many delays that future target dates are tentative.
Soaring costs have also been a source of embarrassment. Early estimates put the cost at $375 million which rose to $450 million as the project dragged on for 11 years.
Petrobras has struggled to maintain profitability after its debt levels rose at the end of its 2012 operations. The state-run major reported a net profit of $10.6 billion in 2012, about 36 percent below 2011. Increased operational costs were among reasons cited by the company for lower profits.
Both Petrobras and Rousseff's administration also blamed the depreciation of the real against the U.S. dollar. The energy company's failure to meet refining targets and the soaring costs of substitute imports also affected the profit margins.
Brazil's fuel and oil imports are said to have 90 percent in the period at a time when Petrobras could have profited from rising local demand.
Officials hope a steady rise in the country's oil and gas production prospects will help improve the economic outlook.
Despite last year's poor economic performance, Brazil improved its balance sheet and was able to reduce its debt burden to a new low of 35.1 percent of national earnings in 2012.