Brazil Confirms Its Santos Find Has Up to 4 Billion Barrels of Light Oil and Gas

Petrobras floating platform off the Brazilian coast Brazil's state-controlled oil and gas multinational Petrobras has just announced that the completion of the Iara well drilling (which first found oil in August 2007) confirmed the discovery of light oil in the Santos basin pre-salt reservoir with a recoverable volume estimated in 3 to 4 billion barrels of light oil and natural gas.

"The quality and porous thickness of the oil-bearing reservoirs proved to be even better than the initial expectations. The new discovery was confirmed by a cable test and revealed the existence of light oil, with specific gravity between 26° and 30° API, in an area of some 300 square kilometers (116 square miles) that has been very well defined seismically," said Petrobras in an official release.

Petrobras says that the set of data collected, in association with the knowledge that has already been acquired for the pre-salt reservoirs enabled to calculate the estimated recoverable volume.

Block BM-S-11 where the drilling has taken place is composed of two exploratory areas. In one of them, the first well, 1-BRSA-369A-RJS (1-RJS-628A), known as Tupi, was drilled and resulted in the discovery announced on June 11 2006, with an estimated recoverable volume of 5 to 8 billion barrels of light oil and natural gas, the Assessment Plan for which is currently in execution.

The Iara well, 1-BRSA-618-RJS (1-RJS-656), is in an area north of Tupi, some 230 kilometers (143 miles) off the coast of the city of Rio de Janeiro and at 2.230 meters (7316 feet) from the water line. The final depth of the drilling was 6,080 meters (19,947 feet).

The consortium exploring the Iara well in block BM-S-11 in ultradeep Santos basin waters is made up of Petrobras (operator 65%), British Gas Group (25%) and Galp Energia (Portugal) (10%).

"The consortium will give continuity to the exploratory activities and to the investments in this area via a Discovery Assessment Plan to be submitted to the ANP (Brazil's energy agency), as provided for in the Concession Agreement, in order to characterize the field better."

This is the second deposit of the pre-salt area of which Petrobras releases potential production data. Brazil which has proven reserves of 14 billion barrels of oil, the pre-salt reservoirs could represent an 85% increase.

Non official estimates in Brazil mention the possibility of 50 to 80 billion barrels, which would have the country among the world's ten leading in reserves, but there is no Petrobras confirmation.

However the Brazilian government has established a task cabinet to analyze where to invest the windfall earnings if such reserves are confirmed as well as introducing reforms to the current exploration and exploitation model.

Bolivia Cuts Brazil Gas

Bolivian President Evo Morales said that he is expelling the U.S. ambassador in Bolivia for allegedly inciting violent opposition protests. Morales' announcement came hours after a pipeline blast triggered by saboteurs forced the country to cut natural gas exports to Brazil by 10%.

"Without fear of the empire, I declare the U.S. ambassador 'persona non grata'" Morales said in a speech at the presidential palace. He added he instructed his foreign minister to send a diplomatic note to Ambassador Philip Goldberg whom he accused of conspiracy with "separatists and divisionists."

In Washington, US State Department spokesman Gordon Duguid called the accusation "baseless" and said the US government had not yet received a note about the ambassador.

The Bolivian president is facing for the second week a wave of increasingly violent anti-Morales protests, the harvest of an "alliance between Bolivia's extreme right and the US government."

Ambassador Goldberg met last week with Ruben Costas, one of Morales' most virulent opponents. Costas is governor of Santa Cruz, Bolivia's richest province and the seat of a pro-autonomy revolt against the nation's first indigenous president.

Anti-Morales protests reached a crescendo on Tuesday with the sacking and burning of government offices in Santa Cruz in which at least 10 people were reported injured. Anti-government activists also seized several natural gas installations in the east.

In the eastern province of Tarija demonstrators triggered Wednesday's pipeline blast by closing a valve, creating pressure that ruptured the line near the border with Paraguay and set off a fire, the government said.

No injuries were reported in what state energy company president Santos Ramirez called "a terrorist attack." Ramirez said both gas plants remained occupied by protesters on Wednesday afternoon and indicated Army troops had been sent to recover the plants and impose order. He estimated damages and losses in 100 million US dollars, plus three weeks to repair the pipeline.

The pipeline blast reduced by 3 million the 30 million cubic meters of gas Bolivia sends Brazil each day, he said. But in Brazil, Mining and Energy Ministry officials said the gas flow remained normal. Any supply interruption could have serious consequences since Bolivia supplies Brazil with 50% of its natural gas used for power generation and cooking.

Morales' opponents in the east are seeking a greater share of revenues from natural gas – Bolivia's chief export – for the richer lowland provinces, home to the bulk of its gas fields. But Morales has devoted much of those revenues to programs that benefit the poor and elderly. He has called the protests a "civil coup."

Morales is seeking approval in Congress for a referendum next December for constitutional changes which are fiercely opposed by opposition governors who rule five of Bolivia's nine provinces. They want greater autonomy and more control over natural gas revenues in their areas.

The president wants to give more power to the country's indigenous and poor communities, by carrying out land reform and redistributing gas revenues.

Mercopress

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