What's In A Name? Petrobras Clears Air On Carioca/Sugar Loaf

Petrobras requires more data before confirming the big Carioca discovery announced April 14 by Brazil National Petroleum Agency (ANP) General Director Haroldo Lima.

"The consortium formed by Petrobras, BG, and Repsol YPF Brasil is still following its exploratory program for Block BM-S-9, in the Santos Basin," Petrobras commented in a press release.

The company stated that one of the wells had hit a discovery in September 2007, at which time "the market was informed that more investments [were] required to drill new wells."

The assessment is currently in a "final preparation phase," and the results are "expected to be submitted to ANP in the coming days," said the company.

The second well, located in the smaller area of the block, has not yet reached the subsalt area, according to Petrobras.

However, ANP's Lima made statements early April 14 that led the industry to believe the "unofficial" results were more firm than pliant.

In November 2007, Petrobras CEO Sergio Gabrielli said that reserves located in this subsalt layer in the Santos Basin make Brazil the eighth-largest possessor of oil and gas reserves.

"Brazil's reserves will lie somewhere between those of Nigeria and those of Venezuela," said Gabrielli.

Currently, the company said it needs to drill more wells, perform "long-duration formation tests" and acquire current geological readings before providing the industry with an accurate assessment of the discovery.

"More conclusive data on the discovery's potential will only be known after the other phases involved in the assessment process have been completed," Petrobras said in the release, "and they will be announced to the market in a timely manner."

Upon the news of the discovery, Petrobras, BG and Repsol YPF stocks shot up in an increase. Petrobras' stocks alone rose more than 5%.

Carioca or Sugar Loaf?

Lima had given the discovery the name "carioca" while Estado News said he had actually been referring to Pao de Acucar, or Sugar Loaf. Though Petrobras hesitated initially to give the discovery a name, the company and ANP said that both names could be referring to the same discovery.

Petrobras later confirmed the exploratory program began by the consortium had been undertaken in block BM-S-9, which is located in the Santos basin.

"The first well drilled showed oil," said Petrobras International Director Jorge Zelada, "but we need to drill other wells." Zelada would not comment on the statements made by Lima. Zelada added that the field will be called Carioca.

"We are assessing what needs to be done to evaluate the find," Zelada said.

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