Brasil Has More Oil Than Expected-A Big Surprise!

Brazil deepwater well hits huge oil reserve
By Jonathan Wheatley in São Paulo
Published: October 29 2010 20:44 | Last updated: October 29 2010 20:44
The Brazilian government has found up to 15bn barrels of oil in a deep-water field known as Libra, in a further indication of potentially enormous reserves contained in the so-called pre-salt region first discovered in 2007.

If confirmed, the Libra field alone could more than double the size of Brazil’s current proven reserves of about 14bn barrels of oil and natural gas equivalent.

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No figure has yet been put on the entire pre-salt region, so called because its oil is trapped beneath several kilometres of seawater, rock and a hard-to-penetrate layer of salt. But people in the industry say it could contain 100bn barrels or more, enough by some measures to put Brazil on a par with Kuwait or Russia among oil producers.

The ANP, the industry regulator, said the Libra field contained between 3.7bn and 15bn barrels of oil, with 7.9bn being the best estimate according to a study commissioned from Gaffney, Cline and Associates, an advisory firm.

The ANP denied any political element to Friday’s announcement, but coming just two days before the second round of Brazil’s presidential election it is certain to provide a boost to Dilma Rousseff, the pro-government candidate of the leftwing ruling PT party, who already had a commanding lead in polls.

Before Libra, the biggest find in the pre-salt region had been the nearby Tupi field, which entered production this week at 14,000 barrels a day, expected to rise to 75,000 a day next year.

Petrobras, Brazil’s national oil company, last month raised $70bn in the biggest share issue ever undertaken. It will use the money to help fund a $224bn investment programme for 2010 to 2014, part of which will be dedicated to the pre-salt fields.

As part of the share issue, Petrobras issued $42.5bn worth of stock to the government in exchange for the rights to 5bn barrels of pre-salt oil.

Parts of the pre-salt region are already being operated under a concessions system by Petrobras and international oil companies. When the region’s potential was understood in 2007, the government stopped granting concessions and sent bills to congress that would make all future operations subject to production sharing.

The regulations would make Petrobras the sole lead operator in pre-salt exploration. A new state-controlled company would oversee operations and decide the production rate.

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