Brazil's Petrobras to Drill New Well in Tupi Pre-Salt Field

RIO DE JANEIRO May 16, 2007 (Dow Jones Newswires)

Brazil's state-run oil firm Petroleo Brasileiro SA (PBR), or Petrobras, later this year will drill another exploration well in the ultra-deep Tupi field, the company's chief financial officer said Tuesday.

Almir Barbassa spoke at a Webcast commenting on first-quarter results.

The Tupi field lies below a water depth of 2,140 meters, then a 2,000-meter-thick salt layer that itself is under 3,000 to 4,000 meters of sand and rocks.

Petrobras has a 65% stake in the BM-S-11 Santos Basin exploration block that contains the Tupi field. U.K. energy company BG Group PLC (BRG) holds another 25%, and Petroleos de Portugal, or Petrogal, holds the remaining 10%.

Petrobras said last October that production tests showed the existence of a "significant volume" of 30 degrees API crude in an exploration at Tupi.

Brazilian media have speculated that a second oil province the size of the Campos Basin could lie below the salt layer. The Campos Basin accounts for 80% of Brazil's oil output, but production comes from layers above the salt, as does all current offshore production. Brazil currently produces a little less than 1.8 million barrels per day.

An executive at the Brazilian unit of Royal Dutch Shell PLC (RDSA) told Dow Jones Newswires in April that his company and Petrobras plan to drill an exploration well in the BM-S-8 block, which lies close to the BM-S-11 block where Petrobras made the Tupi discovery.

Also, Petrobras in April started to drill a well in the BM-S-9 block, which is adjacent to the Tupi field, where oil was found. Petrobras is an operator in that block with a 45% stake, while BG holds another 30%, and Spanish-Argentine energy firm Repsol-YPF (REP) holds another 25%.

Petrobras, in total, plans to drill two more wells in the Santos Basin this year, and several wells off the coast of Espirito Santo state, with a focus on finding light oil and natural gas, Barbassa added.

The company in March announced another oil find in the ultra-deep pre-salt layer, but this time in the Campos Basin off the coast of Espirito Santo State.

"Tests done in the (pre-salt) geological formation have indicated good results and therefore we are stimulated to repeat these tests in similar areas in the Campos Basin," Barbassa said.

Other Petrobras executives, however, in recent months have said that it is too early to make an estimate about what volumes of oil are contained in the pre-salt layer of the Campos and Santos basins.

A Petrobras executive told Dow Jones Newswires in April that the company plans to drill more than 40 offshore exploration wells in Brazil this year.

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

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