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.