Petrobras: Too Early to Estimate Santos Tupi Reserves

RIO DE JANEIRO Feb.9, 2007 (Dow Jones Newswires)

Brazil's state-run oil firm Petroleo Brasileiro SA (PBR), or Petrobras, Friday said it's too early to make a reserves estimate for the Santos Basin Tupi prospect where it hit light oil in October.

U.K. energy company BG Group PLC (BRG), a partner in the project, Thursday had said the 40 kilometer by 20 kilometer field could have estimated hydrocarbons in place of between 1.7 billion and 10 billion barrels of oil equivalent, or BOE.

"We need to study the area better and drill more wells before we can make any estimate," a Petrobras press official said Friday.

Petrobras likely will perform more exploration drilling in the field in 2008, he added.

Petrobras has a 65% stake in the BM-S-11 exploration block in which the Tupi discovery lies. BG Group holds 25% in the block, and Petroleos de Portugal, or Petrogal, the remaining 10%.

Production tests showed the existence of a "significant volume" of 30 degrees API crude in the 1-RJS-628 exploration well, Petrobras said in October.

The BM-S-11 exploration block find lies at a water depth of 2,140 meters. The deposit is considered a new frontier as it lies under a 2,000-meter-thick salt layer that itself lies under 3,000 to 4,000 meters of sand and rocks below the seabed.

Brazilian media even have speculated a second oil province the size of the Campos Basin could lie below the Santos salt layer. The Campos Basin currently produces 80% of Brazil's oil production of little more than 1.8 million b/d.

Petrobras engineers recently have said pumping oil from the extreme depth of the Santos Basin is very expensive and challenging due to complicated geographical conditions.

Oil analysts have said the new discovery is very important, but a determining factor for a possible production will be how high the costs really are to pump oil from the challenging depths of the Santos Basin.

The BM-S-11 exploration block lies 250 kilometers off the coast of Rio de Janeiro.

Copyright (c) 2007 Dow Jones & Company, Inc.

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