Petrobras Oil Find Could Put Brazil on World Oil Map (Update2)
(Updates with details throughout.)
Rio de Janeiro, Sept. 22 (Bloomberg) -- A giant oil strike
off the Brazilian coastline near Rio de Janeiro could help propel
Brazil into the ranks of the world's top off-shore oil producers.
An exploratory well drilled by state-run Petroleo Brasileiro
SA suggests the field in the Santos basin could contain as much
as 700 million barrels of crude, the oil company said last night.
The field could be worth as much as $10 billion, Petrobras said.
``This is preliminary, but it shows the potential of the
Santos basin for Petrobras,' said Mary Quinn, Latin American oil
analyst at Warburg Dillon Read in New York. ``They've hardly done
any work in the field and they've found a giant, something that
could help confirm Brazil as a leading world offshore oil
district.'
Brazil may have as much as 25 billion recoverable barrels of
oil, mostly in fields off the southeastern coastline near Rio de
Janeiro, oil industry executives have said. By comparison,
Prudhoe Bay in Alaska, one of the biggest offshore finds in the
last generation, has about 20 billion barrels, Quinn said.
Preferred stock of Petrobras rose 0.1 percent to 307.70
reais, close to a 23-month high.
Self Sufficiency
President Fernando Henrique Cardoso said the field code-
named BS-500, about 100 miles from Rio de Janeiro, could help
Brazil become self-sufficient in oil by 2005. Brazil produces
about 1.1 million barrels a day of oil, about three-fifths of its
needs.
Petrobras' 8.8 billion of recoverable reserves are about
half of its estimated 17 billion barrels of potential reserves,
the company said.
If the find is as large as is thought, the Santos basin find
could increase Petrobras' proven reserves by about 8 percent. In
the longer run, more oil is likely to be found in the basin and
rival the bigger Campos basin, which is nearby, Quinn said.
The field could produce 100,000 barrels of oil a day, said
Jose Coutinho Barbosa, director of exploration and production at
Petrobras.
``This could open up an important new oil province for us,'
Barbosa said at a press conference.
The oil's quality could provide ``an excellent return for
our refineries' and reduce Brazil's need to import high-grade
crude from Argentina, Nigeria and the Middle East, he said.
Petrobras officials said the company expects to know more
about the find in about six months. Petrobras won't make any
decisions on how much money it will spend to develop the find
until seismic surveys are completed and more exploratory wells
are drilled, Barbosa said.
Oil Basins
The find could lead to investments that would make other
strikes, even smaller ones, more economically viable by
attracting the infrastructure to exploit them, said Quinn.
``Santos seems to have the potential of the Campos basin,'
she said.
The Campos basin, also off the coast of Rio de Janeiro
state, produces about 850,000 barrels a day. The new field is
about the size of the Albacora and Marlim fields in the Campos
basin.
It is only about half the size, though, of the Roncador
field in the Campos basin. Roncador has 1.3 billion barrels of
proven reserves and 2.2 billion of estimated reserves.
Petrobras said the quality of the crude in the new strike is
high, a light grade that has tested at 35 degrees on the American
Petroleum Institute grading system. Arab light crude, a world
benchmark, tests at a lower 32-degrees API, while oil from other
Petrobras offshore fields tests at thicker 19 to 25 degrees API.
Higher-grade crude is lighter and cheaper to refine, making
it worth more on oil market. Brazil has to import higher grade
crude to mix with locally produced oil to make its refineries run
better.
The find was made in an exploration well drilled beneath 1.5
kilometers (one mile) of water. The oil was found in deposits at
about 4 kilometers below the seabed. Petrobras began drilling a
second exploratory in an adjacent field well last weekend.
Since 1971, 100 wells have been drilled in the Santos basin,
most of them in water shallower than the new strike. In 1984, a
field was found with 71 million barrels of oil equivalent, of
which 80 percent of that was natural gas. So far, 28 million
barrels have been produced from that find.
Petrobras also found oil in another field in the southern
end of the basin with estimated reserves of 110 million barrels
of oil equivalent. |
