Petrobras Making 'Good Progress' at Tupi Field -Credit Suisse

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

Brazilian state-run oil company Petroleo Brasileiro SA (PBR) is making "good progress" in the exploration of its ultra-deep Tupi field under a salt layer of the Brazilian shelf, Credit Suisse analyst Emerson Leite said in a research report Tuesday.

Petrobras is drilling a second well at the BM-S-11 Santos Basin exploration block, which contains the potentially massive Tupi field, Eduardo Molinari, Petrobras exploration and production strategy manager, told Leite last week.

Petrobras is drilling the extension well eight kilometers away from the pioneer well and already has reached a layer of light oil similar to the 30 degrees API oil at the pioneer well, Leite said.

However, he said, the company won't provide further information until it conducts a well test.

Leite said he believes Petrobras will delay the release of information on the Tupi appraisal until after a government oil and gas block auction in November. At the auction, the government will offer several blocks in the vicinity of the BM-S-11 block.

Petrobras is sufficiently confident about the Tupi find to have included it in its 2015 production estimate, Leite said.

The oil company expects its oil and gas output in Brazil to rise to 3.058 million barrels of oil equivalent, or BOE, a day in 2012 and to 3.455 million BOE a day in 2015. That is up from 2.055 million BOE a day reached in 2006.

For the more concrete 2008 to 2012 business plan, however, the company isn't incorporating production from Tupi yet, Chief Executive Sergio Gabrielli said in a Web cast on Aug. 15.

In October, Petrobras said production tests showed the existence of a "significant volume" of 30 degrees API crude at Tupi.

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

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

In March, Petrobras announced another oil find in the ultra-deep pre-salt layer, but that is in the Campos Basin off the coast of Espirito Santo State.

Brazilian media have speculated that a second oil field 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 more than 1.8 million barrels a day.

Petrobras executives recently said 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.

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

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