Iara Prospect Still in Evaluation Phase

RIO DE JANEIRO (Dow Jones Newswires), Sept. 1, 2009

Brazilian state-run energy giant Petrobras (PBR) said Tuesday that the promising offshore Iara prospect was still under evaluation, declining to comment on reports of a "positive surprise" at the discovery.

Haroldo Lima, president of regulator National Petroleum Agency, said late Monday that testing at Iara had yielded "a very positive surprise, with immense oil potential."

Petrobras Chief Executive Jose Sergio Gabrielli, however, would only confirm that the company continued to carry out testing at the offshore field.

"I'm not going to comment on the declarations of the ANP president," Gabrielli said.

Lima has a history of making offhand comments that cause a ruckus in Brazilian oil circles. In April 2008, he sent shock waves around the world when he declared the Santos Basin subsalt exploration cluster could contain as much as 30 billion barrels of oil.

Iara is in a separate part of the same BM-S-11 block containing the Tupi field in the Santos Basin. Last year, Petrobras estimated recoverable reserves of between 3 billion and 4 billion barrels of oil equivalent, or BOE.

Recoverable reserves at neighboring Tupi were pegged at between 5 billion and 8 billion BOE in November 2007. Tupi, the Western Hemisphere's largest oil find in more than 30 years, was the first of the so-called subsalt oil discoveries.

The subsalt finds 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.  

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