Brazil Oil Field Could Be Huge Find

By: AP
By: AP

SAO PAULO, Brazil (AP) -- A deep-water exploration area could contain as much as 33 billion barrels of oil, an amount that would nearly triple Brazil's reserves and make the offshore bloc the world's third-largest known oil reserve, a top oil official said Monday.

National Petroleum Agency President Haroldo Lima cautioned that his information on the field off the coast of Rio de Janeiro is unofficial and needs to be confirmed - but his comments sent shares of the state-run Petrobras oil company soaring in New York and Sao Paulo.

Petrobras said in a statement that more studies are needed to determine the potential of what could be the planet's largest oil find in decades.

Lima told reporters that Petrobras "may have discovered a huge petroleum field that could contain reserves large as 33 billion barrels," amounting to the world's third-largest reserve, according to his spokesman, Luiz Fernando Manso.

Manso did not provide any details about where Lima got his information, except to say it came from "nonofficial, non-confirmed sources." Brazil Mines and Energy Minister Edison Lobao declined comment.

Lima's agency regulates Brazil's oil industry, and his comments appeared to represent confirmation of what experts have long suspected: That extremely deep exploration areas hundreds of miles off the nation's coast may hold potentially huge reserves.

Brazil's current proven oil reserves are 11.8 billion barrels, according to the U.S. Energy Department. The U.S. has 21.8 billion barrels in proven reserves.

"You're talking about a reserve the size of total U.S. reserves," said Tim Evans, an analyst with Citigroup Inc. in New York. "It's a big, big number."

If proven, the oil in the exploration area called both Carioca and Sugarloaf Mountain by analysts would also be five times larger than the Tupi oil field, whose estimated reserves of 8 billion barrels were announced by Petroleo Brasileiro SA in November. Petrobras also announced a blockbuster find of natural gas in February in an Atlantic Ocean field nicknamed Jupiter.

The company said the location cited by Lima is made up of two exploration areas in one bloc where test wells are being drilled and geological studies are under way with Petrobras' partners for the bloc, Britain's BG Group and Spain's Repsol YPF.

"More conclusive data about the potential of the discovery will only be know after the conclusion of the other phases of the evaluation process, and the market will be informed at the opportune moment," Petrobras said in its statement to Brazilian securities regulators after Lima made the comments.

Industry experts say the Tupi and Jupiter fields alone could turn Brazil into a major oil and gas exporter and lead to it joining OPEC.

Petrobras is renowned for its deep-water drilling ability, and is widely regarded as one of the best state-run oil companies in the world.

While the potential Brazil find could add significant supplies to a global oil market many see as tight, it would likely take the better part of a decade before any of oil finds its way to market. The site will need to be studied further, and drilling platforms must be designed, built and transported before it can start producing oil.

However, it does cast new doubt on peak oil theory, which postulates that world oil demand will soon outpace supply.

It is impossible to say whether or not more 33-billion-barrel oil fields exist under the sea, Evans said.

"Nobody really has data on what's out there in the middle of the ocean," Evans said.

By late afternoon, the company's American depository shares were up 8.1 percent in late Monday afternoon in New York, or $9.19 to $122.04.

Petrobras shares in Brazil went on a wild ride in Sao Paulo, fluctuating between 2 percent and 7 percent higher and settling up 5.6 percent in late afternoon trading while the benchmark Ibovespa index was down nearly 1 percent.

Oil prices were unaffected by the news. Light, sweet crude for May delivery rose $1.62 to settle at a record $111.76.

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Associated Press writers Stan Lehman and John Wilen contributed to this report from Sao Paulo and New York.

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