Brazil just keeps looking for oil - why in the world do they do that as the king of ethanol?
UPDATE: Petrobras Shares Surge On Report Of Major Discovery
April 14, 2008: 02:18 PM EST
(Updates share price; adds more details and background)
RIO DE JANEIRO -(Dow Jones)- Shares in Brazil's state-run oil firm Petroleo Brasileiro SA (PBR), or Petrobras, surged Monday on a report of a gigantic new discovery in Brazil's ultradeep pre-salt oil area.
Petrobras shares soared 5.16% to 82.66 reals ($49.20) at 1740 GMT in Sao Paulo.
The Pao de Acucar field could contain up to five times as much oil reserves as the nearby Tupi field, the Estado news agency reported, citing Haroldo Lima, the head of Brazil's National Petroleum Agency, or ANP.
Petrobras in November said Tupi could contain up to 8 billion barrels of oil equivalent, or BOE.
Preliminary information from Petrobras and its exploration partners in the area indicate Pao de Acucar - or Sugar Loaf in English - could contain up to 33 billion BOE, Lima is quoted as saying on Estado.
"If this were to be confirmed, it would be the biggest discovery ever made in the world," Lima is quoted as saying.
A spokesman for Lima told Dow Jones Newswires that estimates for the Pao de Acucar field aren't official and that Lima was only referring to reports.
The Web site Next Energy News in December said "preliminary exploration of the area has determined that the Sugar Loaf field is five times the size of the Tupi field," and that according to officials at Petrobras, the field "may produce up to 40 billion barrels of oil." The Web site didn't identify the Petrobras officials.
A Petrobras spokesman had no comment on the reports. The company may put out a statement later in the day, he added.
World Oil Magazine said on its Web site in February that if reports on the field prove correct, the Carioca and Sugar Loaf fields combined "would be the third-largest field in the world."
The Pao de Acucar reserve lies in the BM-S-8 exploration block of Brazil's Santos Basin. The block is operated by Petrobras with a 50% stake, while Royal Dutch Shell PLC (RDSA) has a 40% stake and Portugal's Galp Energia (GALP.LB) 10% .
World Oil Magazine said that it's likely the Pao de Acucar find is a large structure that extends into the Carioca find in the adjacent BM-S-9 block, and possibly also to the BM-S-21 and the BM-S-22 blocks.
The BM-S-9 block is operated by Petrobras with a 45% stake, while BG Group ( BG.LN) holds 30% and Repsol-YPF (REP) 25%. The BM-S-21 block is operated by Petrobras with a 80% stake, while Galp Energia holds 20%. The BM-S-22 block is operated by ExxonMobil Corp. (XOM) with a 40% stake, while Hess Corp (HES) holds 40% and Petrobras 20%.
Credit Suisse analyst Emerson Leite in January reportedly said that the fields of Pao de Acucar and Carioca in the pre-salt area combined could have up to 24 billion BOE in reserves.
Tupi, Carioca and Pao de Acucar lie in Brazil's ultradeep pre-salt area. Oil found there lies at water depths of more than 2,000 meters, and a further 5,000 meters below layers of sand, rocks and salt, making possible production very challenging and expensive.
Petrobras said it will start producing 100,000 barrels a day at Tupi in 2011 and that the field later could reach a peak output of up to 1 million barrels a day.
-By Bernd Radowitz, Dow Jones Newswires; +55-21-2553-7322; bernd.radowitz@ dowjones.com;
(END) Dow Jones Newswires
04-14-08 1418ET
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