Brazil Says It Can Extract Oil from Pre-Salt Reserves for Under US$ 40 a Barrel

Petrobras's pre-saltPetrobras, the Brazilian-government-controlled oil and gas
multinational, informed that production from the recently discovered
massive oil fields deep below the ocean floor off Brazil's Atlantic
coast was viable at US$ 40 for a barrel for benchmark Brent crude.

The "pre-salt" reserves, so called because they are located under a thick layer of salt, can be extracted at a cost of less than US$ 40 per barrel, Petrobras finance chief Almir Barbassa told reporters in São Paulo.

Brent, used as the benchmark for crude from the pre-salt layer, was trading Tuesday above US$ 66 per barrel.

"But we still have a lot to improve in terms of production and that is something we are working hard at. Our engineers are dedicated to developing a production method that is more adequate for the pre-salt zone," said Barbassa.

The discoveries in the pre-salt layer, first announced in late 2007, could eventually lead to a nearly six-fold increase in Brazil's current proven reserves of 14 billion barrels and transform the leading Mercosur member in a major oil exporter.

Acknowledging that Petrobras alone is not capable of developing the massive pre-salt reserves, Brazil announced last month that it would invite foreign oil companies to bid for concessions in that area beginning next year. Brazil halted the sale of concessions after the massive finds were made.

Brazil expects "to go from production of between 2 and 2.4 million barrels of petroleum daily to 5.7 million in 2020," Barbassa said.

The "ambitious" strategic plan unveiled by Petrobras in January was well-received by investors, with the company's shares on the São Paulo and New York stock exchanges outperforming the benchmark indexes for both markets, Barbassa said.

In January, the Brazilian oil giant released its 2009-2013 business plan, which includes the pre-salt assets for the first time and calls for a sharp increase in investment from 112.4 billion to 174.4 billion US dollars.

"We were prepared for the crisis that came. So we were able to announce an ambitious plan in the middle of a crisis that required more financing than previous ones and thereby keep the company on pretty solid ground," added Barbassa.

Petrobras, an integrated energy company and the global leader in deepwater oil exploration and production, operates in 27 countries in the Americas, Africa, Asia and Europe.

Shares of Petrobras, Brazil's largest corporation, trade on the São Paulo, New York, Madrid and Buenos Aires stock exchanges, but the Brazilian government retains control through a golden share.

Mercopress

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