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 SΓ£o 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 SΓ£o 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 SΓ£o Paulo, New York, Madrid and Buenos Aires stock exchanges, but the Brazilian government retains control through a golden share.

Mercopress

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  • Show Comments (3)

  • mcv

    I meant over the pipeline” issue”with Chavez the Clown πŸ˜‰

  • mcv

    Ch C take another deeeeep look over the pipeline with Chavez the Clown u will find darknesssss on it!!!!! Wich I can tell for sure!!!Brazil is better off at it!! πŸ˜‰

  • ch.c.

    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.
    In Chavez the Clown land & garden there is already far more proven oil reserves than what Brazil is dreaming of having.

    And Venezuela population is 1/6th the Brazilian population.

    Did/does that makes Venezuela a developed and wealthy country ? Not to my knowledge…for sure !

    Stupid question to all proud Brazilians :
    1) Short memory of your Ultra Mega ” Proven & Viable” Project of building a pipeline with Chavez the Clown from Venezuela down to Brazil and Argentina ???????
    2) Short memory of your “proven and guaranteed” maths that your sugarcane ethanol industry was profitable at US$ 35.- per barrel oil equivalent ? then why was your ethanol industry LOSING money when the 2008 average oil price was at US$ 99.- ?????

    Lets the new Brazilian Bubble Develops ! There is still money to made…until the next burst and meltdown….as usual !
    And as usual Brazilians will be the smartest cookies on earth for the bull , and the villains foreigners responsible for the next meltdown !

    Nothing new ! absolutely Nothinggggg new under the sun !

    Stay bullish. I am…for the time being !

    A word of caution for your sugar & ethanol :
    Sugar is at close to the 2005 year top of US$ 20 cents per pound.
    I already, today, started to short sugar (March 2010 futures prices) lightly at 18,30 cents and will continue to short with 2 cents scale at higher prices. Hopefully it goes higher first, so that I can add a few more shorts.
    πŸ˜€ πŸ˜‰ πŸ˜€ πŸ˜‰ πŸ˜€ πŸ˜‰ πŸ˜€ πŸ˜‰ πŸ˜€ πŸ˜‰

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