Petrobras: Volumes at Santos Basin Sub-Salt Find Still Unknown

RIO DE JANEIRO Mar 29, 2007 (Dow Jones Newswires)

Brazil's state-run oil firm Petroleo Brasileiro SA (PBR), or Petrobras, said it's still not possible to evaluate what volume of oil is contained in an ultra deep Santos Basin field discovered last October.

"Until the conclusion of evaluation tests, it's impossible to determine the quantity of oil in the discovery," Petrobras said in a statement to Brazil's stock market commission.

Production tests showed the existence of a "significant volume" of 30 degrees API crude in the 1-RJS-628 exploration well in the BM-S-11 exploration block, Petrobras had said in October.

The 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.

Petrobras has a 65% stake in the exploration block that contains the discovery. U.K. energy company BG Group PLC (BRG) holds another 25%, and Petroleos de Portugal, or Petrogal, holds the remaining 10%.

Petrobras also said Thursday that it can't give the volume of oil at another discovery, in the Campos Basin off the coast of Espirito Santo state, which it had announced in early March.

That field is also under a thick salt layer.

The Brazilian media has speculated that a second oil province the size of the Campos Basin could lie below the Santos salt layer. The Campos Basin currently accounts for 80% of Brazil's oil production, which totals a little more than 1.8 million barrels per day.

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

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

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

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