updated 5/26/2008 4:54:38 PM ET 2008-05-26T20:54:38

Brazil on Monday announced plans to spend at least $5 billion to develop deep water oil finds, building new ships and hiring rigs as soaring world fuel prices boost demand for drilling equipment.

State-run oil company Petroleo Brasileiro SA, or Petrobras, will spend $5 billion to build 146 ships and plans to hire 40 deep-water drilling rigs and platforms, President Luiz Inacio Lula da Silva told shipbuilders in Niteroi, a harbor town near Rio de Janeiro's coast. Analysts said the additional equipment could cost an extra $15 billion.

Petrobras has made a series of large offshore oil finds in the nearby Santos Basin, including a possible 8 billion barrel discovery at the Tupi field in November — the biggest in the Western Hemisphere since 1976.

But as global oil prices soar, competition for equipment to tap that oil is increasing. Petrobras now leases nearly 80 percent of all deep-water drilling vessels in the world, according to local media reports. A Petrobras spokesman declined to confirm that figure or give his name, citing company policy.

The plan to modernize Petrobras' own fleet would employ about 8,000 shipbuilders, at least 70 percent of them Brazilian, and would require an additional 3,800 crew members once the ships are complete in 2017, Petrobras said in a statement.

Silva noted that Brazil's naval industry has grown more than 20 times since he took office in 2003, from 1,900 to 40,000 workers today.

Petrobras, which Silva said has become the world's sixth largest company, announced last week that it had discovered new medium-grade crude deposits in the Santos Basin at a depth of 4.2 miles. It did not estimate the size of the find.

Deep underwater layers of sand, rock and salt make extraction expensive.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


Discussion comments


Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 3.79%
$30K home equity loan FICO 4.99%
$75K home equity loan FICO 4.69%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.83%
Cash Back Cards 17.80%
Rewards Cards 17.18%
Source: Bankrate.com