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UPDATE 1-Shell's Brazil strategy factors in Petrobras scandal -CEO

(In 3rd paragraph of April 23 item, corrects to say Shell (LSE: RDSB.L - news) is set to become 2nd largest oil producer, and that BG purchase agreement is not yet completed)

By Anthony Boadle

BRASILIA, April 23 (Reuters) - Royal Dutch Shell Plc (Xetra: R6C1.DE - news) has taken into account the risks presented by the Petrobras graft scandal to its expanding operations in Brazil and is confident the Brazilian state-run oil company will emerge stronger, Shell's CEO said on Thursday.

Chief Executive Ben van Beurden said oil production from Brazil's offshore subsalt region will remain profitable, and predicted that oil prices will rise from the low levels of the past six months.

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Van Beurden briefed Brazilian President Dilma Rousseff for 1-1/2 hours on Thursday on his company's operations in Brazil, where Shell is set to become the second-largest oil producer following its April 8 agreement to purchase rival BG Group (LSE: BG.L - news) .

The acquisition increases Shell's role in Brazil, where it had been the No. 3 producer, giving it a financial stake in giant new offshore fields operated by Brazil's troubled state-run Petroleo Brasileiro SA, or Petrobras.

In January, BG's 140,562 barrels a day of oil and gas output (boepd) in Brazil was nearly four times greater than Shell's 49,014 boepd.

While Shell will have to take a backseat to Petrobras on (Sao Paolo: PETR3F.SA - news) operational decisions, it is believed to have the money and technology needed to push Petrobras-led projects forward.

Petrobras took a $17 billion charge on Wednesday to account for the costs of a political kickback scandal that forced it to cut investment, and paralyzed its contracts with engineering firms under investigation for bribery.

"I have 100 percent confidence that Petrobras will come through this probably as a stronger company than it was before," van Beurden said at a news conference after meeting Rousseff.

He said Brazil's subsalt resources are among the best in the world and that Shell is interested in deepening its involvement.

"The resources in production today are very, very strong. I do not see any issue of profitability of the operation," he said.

Van Beurden said Shell has studied the risks of working with Petrobras.

"We have taken into account the impact that any of today's news will have on the development of existing fields as well as the Libra field going forward, and these risks have been fully factored into the commercial arrangements we have done with BG," he said.

Van Beurden expects Brazil to account for 20 percent of Shell's global oil output in a decade due to the BG deal.

He said Shell would consider buying any Petrobras assets put up for sale "if the opportunities come up". (Reporting by Anthony Boadle; Editing by Peter Galloway)