Petrobras Makes New Discovery Onshore Espirito Santo Basin

Petrobras has discovered heavy oil (estimated 13 degree API) in the onshore portion of the Espírito Santo basin, after drilling directional well 3-CCS-2D-ES (Córrego Cedro Sul) in the municipality of São Matheus. More drilling will be needed to determine the size of the reserve, but preliminary estimates point to 50 million barrels of recoverable oil. The discovery occurred in the São Mateus and Mucuri formations, where 62 meters of oil-bearing sandstone were found, peaking at about 560 meters depth.

The density is similar to that found in Campo de Fazenda Alegre, in the same basin, specially suited to the production of lubricants. The infrastructure currently nearing completion in the region, consisting of a treatment plant and a terminal for transporting heavy oil, will make it easier to develop the new deposit, should it be declared commercially viable. The discovery supports Petrobras's decision to resume exploration of mature basins, like onshore Espírito Santo, and to invest in technological solutions for the exploration and production of heavy oils. The combination holds out significant potential for raising the Company's production and reserves.

The new discovery is located in exploration block BT - ES - 21 (BT stands for onshore basin, ES for the state of Espírito Santo and 21 is the number of the block), acquired by Petrobras in the 5th round of auctions held in August 2003. It is also the result of Petrobras's compliance with the minimum exploration program signed in November 2003 with the National Oil Agency (ANP).