Brazil’s Petrobras announces deep-water oil find


Sao Paulo : Brazilian state-controlled energy company Petrobras said it struck oil at a pre-salt block located in “ultra-deep” waters of the Santos Basin, located off the country’s southeastern coast.

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The find was made after drilling the Carioca Nordeste well, which has a water depth of 2,151 meters and is located 275 km off the coast of Sao Paulo state, the company said in a statement Tuesday.

According to preliminary analysis, the oil is “high quality” with an American Petroleum Institute gravity of 26 degrees.

Petrobras holds a 45 percent stake in the BM-S-9 block and is the operator, while the other members of the consortium are Britain’s BG Group, with a 30 percent stake, and Spain’s Repsol-YPF, with a 25 percent interest.

The pre-salt area is a massive, recently discovered frontier that measures 800 km long and 200 km wide and is estimated to hold some 80 billion barrels of crude.

But accessing those fields will be very costly and pose an enormous technical challenge because they are located at depths of between 5,000-7,000 m and under a layer of salt up to 2 km thick.

Drastic changes in temperature as the oil is brought to the surface add to the technical complexity of developing those fields.

A law signed late last year declares the pre-salt reserves to be state property and stipulates that they will be explored and developed by consortiums in which Petrobras will have a minimum 30 percent stake.

It establishes a production-sharing model in which the consortiums must give the Brazilian government a percentage of the extracted crude. They will also be required to make royalty payments.

Under the legislation, Petrobras will be the operator of all projects and also can be awarded exploration contracts without a competitive bidding process.

The Brazilian government owns more than 50 percent of the voting rights in Petrobras, an open capital company whose shares trade on the Sao Paulo, New York, Madrid and Buenos Aires stock exchanges.

Petrobras became the second largest company in the Americas by market capitalisation after a $66.9 billion share sale last September, the biggest in history.

Petrobras said Monday that it produced an average of 2.58 million barrels of oil equivalent per day in 2010, up 2.3 percent from the previous year and a new record for the state-controlled company.