BG strikes oil at Iara well in Brazil

Geologists say Brazil’s subsalt reserves, which span an area from the Santos Basin in the south to the Campos and Espirito Santos basins up the coast, could exceed 70 billion barrels -- more than OPEC members such as Libya. Brazil’s Petrobras has a 65% interest in the concession area where Iara lies. BG has a 25% stake and Galp Energia, a 10% stake.

Last November, Petrobras announced a recoverable reserve estimate for Tupi, the first well in the BM-S-11 area where Iara lies, of 5-8 billion barrels of oil equivalent which if confirmed, would make it the world’s biggest deepwater find. “We are delighted to report another material discovery with Iara,” CEO Frank Chapman said in the statement.

“The exceptional sequence and scale of our drilling success in this area reflects the world class status of the pre-salt Santos Basin, to which BG Group has substantial exposure.” Guilherme Estrella, head of exploration and production at Petrobras, said last month he expected that subsalt oil finds in the offshore Santos Basin are interconnected, and companies involved in various separate subsalt oil finds would have to work together.

In addition to Petrobras BG and Portugal’s Galp, ExxonMobil Corp, Hess Corp, Petrogal, Spain’s Repsol and Royal Dutch Shell are all involved in the region. BG shares are up 41% in a year, outperforming the FTSE All Share Oil and Gas Index by the same margin. Iara lies 230 kilometers off the coast of Rio de Janeiro. (Reuters)