Brazil oil field could be huge find

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A deep-water exploration area could contain as much as 33 billion barrels of oil, an amount that would nearly triple Brazil’s reserves and make the offshore bloc the world’s third-largest known oil reserve, a top energy official said Monday.

National Petroleum Agency President Haroldo Lima cautioned that his information on the field off the coast of Rio de Janeiro is unofficial and needs to be confirmed — but his comments sent shares of state-run oil company Petrobras soaring in New York and Sao Paulo. Petrobras said in a statement that more studies are needed to determine the potential of what could be the planet’s largest oil find in decades. Analysts said the magnitude of the find, if confirmed, could have far-reaching global energy ramifications. “This would lay to rest some of the peak oil pronouncements that we were out of oil, that we weren’t going to find any more and that we have to change our way of life,” said Roger Read, an energy analyst and managing director at New York-based investment bank Natixis Bleichroeder Inc., which buys and sells stock in offshore drilling contractor Seadrill , a Petrobras contractor.

Lima told reporters that Petrobras “may have discovered a huge petroleum field that could contain reserves large as 33 billion barrels,” amounting to the world’s third-largest reserve, according to his spokesman, Luiz Fernando Manso. His agency later issued a statement saying the comments were based on a recent report in World Oil magazine and a report last November from Brazil’s Agencia Estado news agency.

Brazilian Planning Minister Paulo Bernardo declined later Monday to discuss the discovery, saying, “It’s better to wait for official confirmation.” Lima’s agency regulates Brazil’s oil industry, and his initial comments appeared to represent confirmation of what experts have long suspected: That extremely deep exploration areas hundreds of miles off the nation’s coast may hold potentially huge reserves.

Brazil’s current proven oil reserves are 11.8 billion barrels, according to the US Energy Department. The US has 21.8 billion barrels in proven reserves. “You’re talking about a reserve the size of total US reserves,” said Tim Evans, an analyst with Citigroup Inc. in New York. “It’s a big, big number.” If proven, the oil in the exploration area called both Carioca and Sugarloaf Mountain by analysts would also be five times larger than the Tupi oil field, whose estimated reserves of 8 billion barrels were announced by Petroleo Brasileiro SA in November. Petrobras also announced a blockbuster find of natural gas in February in an Atlantic Ocean field nicknamed Jupiter. “More conclusive data about the potential of the discovery will only be known after the conclusion of the other phases of the evaluation process, and the market will be informed at the opportune moment,” Petrobras said in its statement to Brazilian securities regulators after Lima made the comments.

While the potential Brazil find could add significant supplies to a global oil market many see as tight, it would likely take the better part of a decade before any of the oil finds its way to market. Evans said it’s impossible to say whether more 33-billion-barrel oil fields exist under the sea. “Nobody really has data on what’s out there in the middle of the ocean,” Evans said.

Petrobras’ American depository shares closed up 8.3% in New York, or $9.33 (€5.88) to $122.18 (€76.99). The company’s shares went on a wild ride on Sao Paulo’s Bovespa exchange, fluctuating between 2% and 7% higher and settling up 4.8% while the benchmark Ibovespa index fell 0.7%. Oil prices were unaffected by the news. Light, sweet crude for May delivery rose $1.62 (€1.02) to settle at a record $111.76 (€70.43) a barrel. (International Business Times, Hong Kong)

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