Petrobras said Jurong had submitted a cheaper proposal that would around $100 million less than it had estimated late lat year when it started the search and 6 percent less than offered by Jurong's Brazilian competitor Fels Setal/Technip-Coflexip.

The tanker, Felipe Camarao, will be converted into a floating production, storage and offloading vessel.

The 180,000 barrel per day rig should start producing in 2004 at the Albacora Leste oil field in the Campos Basin, which accounts for over 80 percent of Brazil's total oil output, which in May reached 1.53 million bpd.

Petrobras also said it would hold licensing contests in the second half of the year to build two rigs of similar size for Marlim Sul and Roncador fields in the same basin.

The company also needs to convert its P-47 rig into a processing and treatment unit for the Marlim field and build two new fixed rigs for the Campos Basin and Espirito Santo coast.

Petrobras said about 45 percent of the materials and works in this program would be contracted with the local industry. The company expects to spend a total of approximately $4 billion on these projects.

Petrobras hopes to boost output to 1.9 million bpd in 2005 from last year's 1.4 million. Its investment plan for 2000-2005 reaches nearly $32 billion.