Galp See Brazil's Tupi Profitable at Current Oil Prices

RIO DE JANEIRO (Dow Jones Newswires), Mar. 5, 2009

Portugal's Galp Energia believes production at the Tupi subsalt oil field in Brazil is viable despite the slide in international oil prices, Galp's chief executive said Wednesday.

"Production at Tupi is competitive, even at the actual level of oil prices," Galp CEO Manuel Ferreira de Oliveira was quoted by the Estado news agency as saying after his company released its fourth-quarter earnings.

Production at the field was expected to start by end-2010, Oliveira said.

Galp holds a 10% stake in the BM-S-11 block in Brazil's offshore Santos Basin. Brazilian state-run energy giant Petrobras is the lead operator of the block with a 65% stake, while BG Group holds the remaining 25%.

In November 2007, Petrobras estimated recoverable reserves at Tupi at between 5 billion and 8 billion barrels of oil equivalent, or BOE.

According to Oliveira, Galp plans to invest $3 billion over the next few years to develop its Brazilian prospects.

"The projects in Brazil are going to gain strength this year and the next," Oliveira added.

In addition, Oliveira said that output at the Iara field was expected to start in 2014. Iara is contained in a separate portion of the same BM-S-11 block, with estimated recoverable reserves of between 3 billion and 4 billion BOE.

"I can't confirm that with a lot of conviction because the projects are still in an evaluation phase," Oliveira said. "But as soon as the evaluations are completed, the projects will certainly be approved."  

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