Petrobras CEO: Ready to Operate Subsalt Blocks

RIO DE JANEIRO (Dow Jones Newswires), Jul. 31, 2009

Brazilian state-run energy giant Petrobras (PBR) is capable of being the lone operator of government-owned offshore oil concessions, the company's CEO told the local Estado news agency Friday.

"We're more than capable, yes. There isn't another company like Petrobras. Nobody has the same characteristics as we do," Jose Sergio Gabrielli said in Brasilia.

According to local press reports, Brazil's government is considering making the company the lead operator for all unlicensed exploration blocks in the promising subsalt region. The concession blocks currently remain under control of the government.

A government panel formed by President Luiz Inacio Lula da Silva last year is studying possible changes to Brazil's oil laws that would give the government a greater stake in offshore oil deposits. Lula wants to use the newfound oil wealth to ease Brazil's crushing poverty and improve the country's education system.

The panel is expected to submit its proposed changes to Lula in the next few weeks. It is expected that any changes will then be put up for Congressional debate when lawmakers return from vacation in August.

The so-called subsalt oil discoveries were made under a thick layer of salt in the Santos Basin off the coast of Sao Paulo and Rio de Janeiro states. The oil lies under more than 2,000 meters of water and a further 5,000 meters under sand, rock and a shifting layer of salt.

In November 2007, Petrobras estimated recoverable reserves at the Tupi field were between 5 billion and 8 billion barrels of oil equivalent, or BOE. That was the largest discovery in the Americas in more than 30 years.  

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