Brazil Discovers Huge Oil Field and May Become Major Oil Exporter

Brazil's Petrobras workers Petrobras, Brazil's state-controlled oil company, announced Thursday, November 8, that it has discovered as much as eight billion barrels of light crude in an ultra-deep field off the coast of Rio de Janeiro, an amount that could transform the country into a major world oil exporter.

Petrobras said that the Tupi field holds between five and eight billion barrels of recoverable light oil. The announcement sent Petrobras shares soaring 15.7% in New York, to a new 52-week high, in afternoon trading.

The sheer magnitude of the find suggests Brazil could transform itself from a medium-level oil producer "to another level, like Venezuela, Arab nations and others," said Brazilian presidential chief of staff Dilma Rousseff.

"This has entirely changed our situation" she said underlining that the amount in the Tupi field could represent 40% of all oil ever discovered in Brazil.

The country became a net exporter of oil last year, but must still import light crude oil for the refined products it needs. Brazil mostly produces and exports heavy crude oil, which has to be mixed with the light oil in refineries.

The oil in the Tupi basin and potentially in other fields nearby could drastically change Brazil's role in the world's oil business, where "the game is to become a petroleum exporter" pointed out Rousseff.

The Tupi field lies at a depth of 2,140 meters of water, plus 3,000 meters of sand and rocks and then another 2,000 meters thick layer of salt. Getting that oil out of the Earth's crust is a formidable challenge, but Petrobras has become a global leader in "ultra-deep" offshore oil extraction.

Petrobras oil and gas reserves in Brazil stood at 10.573 billion barrels of oil equivalent at the end of 2006, according to the measuring criteria used by the U.S. Securities and Exchange Commission.

"If recoverable oil and gas volumes for the pre-salt reservoirs are confirmed, they will significantly raise the quantity of existing oil in Brazilian basins," Petrobras said in a statement.

Petrobras also announced that the wells that reached the pre-salt layer and have been tested show "high productivity of light oil and natural gas".

These wells are located in the basins of Espí­rito Santo, Campos, and Santos (the Santos Basin ranges from the municipality of Cabo Frio, in the southeastern Brazilian state of Rio de Janeiro, to the upper portion of Florianópolis, capital of the southern state of Santa Catarina).

The pre-salt layer is comprised of reservoir-rocks located underneath a large layer of salt that extends 800 kilometers, –and 200 kilometers wide–, along the coast of the states of Espí­rito Santo (SE) to Santa Catarina, in depths ranging from 1.500 to 3.000 meters under water and 3.000 to 4.000 meters underground.

Felipe Cunha, an oil analyst with the São Paulo-based brokerage Brascan, said the best news for Brazil is that the Tupi field guarantees Brazil's oil output will continue to grow.

"If the best-case scenario happens, this discovery would make Petrobras' reserves overcome those of Shell and Chevron, and put Petrobras behind only Exxon and British Petroleum", said Cunha.

Petrobras has a 65% operating stake in the Tupi field, Britain's BG Group PLC holds 25% and Petroleos de Portugal hold the remaining 10%. A billion US dollars have been invested in the exploration of the field and the first of fifteen wells demanded a full year and cost US$ 240 million. The test wells drilled at the Tupi field that lie under 2,166 meters of water, 286 kilometers south of Rio de Janeiro.

Since its creation, Petrobras has discovered 25 billion barrels of oil and natural gas in Brazil, of which 11 billion have already been pumped. The current Brazilian proved reserves are 14 billion barrels.

Most of this oil and natural gas is located in the so-called "post-salt" geological layers, 80% of which in the Campos Basin, where heavy oil predominates. Beginning in 2003 Petrobras expanded activities and has managed to identify 9 billion barrels in reserves in the past 5 years.



  • Show Comments (6)

  • Hiberto

    It dos not matter how much oil is found in Brazil, it will all be squandered on everything except the people of Brazil. Can you imagine , it will not benefit one person in Brazil except those who are deemed worthy , the government elite. BR 101 needs to be replaced immediately with I101. Try driving from say Sau Paulo to Vitoria on essentialy a two lane highway , very dangerous and very frustrating for truck drivers . Please Brazil use your natural resourses and financial blessing to help your own people.

  • conceicao

    baba, are you describing me or bo? At least he laughs at my football jokes sometimes.

  • baba

    to conceicao
    You fail to understand the absence of intelligence… think of BO this way, a large dark empty space with a lonely quadriplegic neuron crawling around. Probably a (Republican) Christian fundamentalist from the Midwest with the neck as red as a tomato and think that George Bush is doing one hell of a job! 🙂 😉 😀 😉 😉 😉

  • conceicao

    bo, I disagree with you if you think that the tenor of trade negotiations between the U.S. and Brasil would not change if Brasil established itself as a significant oil exporter. I also disagree with you if
    you think notions of trade reciprocity should enter into the U.S.’s attitude toward securing energy supplies. I especially don’t understand how anyone could argue that it is in the interests of the U.S. to
    import Chavez’s oil without a tariff and exclude Brasilian ethanol through a blatant handout to ADM and a bunch of millionaire corn farmers. Maybe this oil find could be the first step toward a workable
    FTAA. Mexico’s status as an oil exporter certainly had a lot to do with the implementation of NAFTA. Also, note the recent Florida trade mission to Brasil. There are a lot of U.S. states that would take all the Brasilian ethanol that they could get tariff-free if the federal government, which has no business screwing around with markets like this any way, would just get out of the way.

  • bo

    yeah conceicao…I’m sure that the U.S. will repeal a tax energy law because of petrobras! 😀 Why don’t we make import taxes reciprocal for each country…would only be fair, wouldn’t it?

    If we did Brazilian exporters would be absolutely FUCKED because they’re products would be taxed out of the marketplace….and the brazilian gov’t does with imports here!

  • conceicao

    Time to “politely” let the U.S. know that it is time to do something about the ethanol tariff or go to the back of the line in terms of contracting for the export of any of this oil.

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