Brazil Petrobras Expert: Pre-Salt Finds Likely Contiguous

SAO PAULO (Dow Jones Newswires), August 13, 2008

Oil discoveries in the so-called pre-salt layer off the southeastern coast of Brazil are likely to be contiguous, a factor that will trigger formal cooperation among the seven companies holding concessions in the region, a Brazilian oil company expert said Wednesday.

"Recent seismic studies indicate a high degree of contiguity among sites around the Tupi well," said Eduardo Molinari, exploration and production coordinator at Brazilian state-controlled energy company Petroleo Brasileiro SA (PBR), or Petrobras. Molinari made the comment at a meeting with financial-market analysts.

The Tupi discovery was announced by Petrobras last year. At that time, officials said it could contain between 5 billion and 8 billion barrels of crude oil. Those figures, however, were only estimates, with a formal statement on reserves at Tupi only expected in the second half of 2009.

Following the Tupi discovery, oil discoveries at other wells off the southeastern coast were also announced by Petrobras and by some of the private companies also holding exploration concessions in the area. No formal estimates have been issued about reserves at any of the sites.

Molinari said that, under Brazilian law, concession areas found to be contiguous become the object of joint exploration by companies holding the various concessions. "This is to avoid predatory drilling by one company in another's area," the executive said.

Molinari said "the companies operating around the Tupi site will have to sit down and talk soon."

The oil finds are located in an offshore area under the Atlantic seabed beneath a large salt layer.

Seven companies hold concessions or stakes in concessions in the region. They are Petrobras, BG, Galp, Repsol, Shell, Exxon and Amerada Hess.

Copyright (c) 2008 Dow Jones & Company, Inc.

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