UPDATE 1-Brazil oil prospect will have significant flows -QGEP

Thu Jan 3, 2013 12:38pm EST

* Petrobras, Galp, QGEP, Barra own prospect

* Carcará wells could produce 35,000 boe/day -QGEP

* Well drilled on Carcará cost $300 mln, now closed

By Jeb Blount

RIO DE JANEIRO, Jan 3 (Reuters) - An offshore oil prospect owned by Brazil's Petroleo Brasileiro SA, Barra Energia, QGEP Participacoes SA and Portugal's Galp Energia SGPS SA will have significant flows when it starts output later this decade, a project partner told investors on Thursday.

Wells in the Carcará offshore oil prospect, one of the largest recent "subsalt" discoveries in Brazil, will likely produce as much as 35,000 barrels of oil and natural gas equivalent a day (boepd) when it begins producing in 2018, QGEP, which owns 10 percent of the prospect, said on a conference call with investors.

"We are expecting these levels of flows, orders of magnitude similar to the Lula Field," Sergio Michelucci, director of exploration and production at QGEP, said.

At current market values for Brent Crude oil, output from such a well would be worth about $3.92 million a day or about $1.43 billion a year. Most Brazilian oil trades at a discount to Brent.

The Carcará prospect in the BM-S-8 block is 66 percent owned by Petrobras, as Petroleo Brasileiro is known, 14 percent by Galp and 10 percent each by QGEP and Barra Energia. China's China Petroleum & Chemical Corp, known as Sinopec, owns 30 percent of Galp's Brazilian assets, including Carcará.

On Wednesday, Petrobras said it finished drilling the group's main well on the Carcará prospect in the Santos Basin south of Rio de Janeiro and that it had discovered a 471-meter (1,545-foot) column of high-quality oil in the prospect.

On Aug. 13 Reuters reported that Carcará was one of the most significant discoveries in the country's subsalt polygon, a region that contains most of Brazil's actual and expected future output.

The expected flow levels from Carcará wells, and there are expected to be several producing wells in the area, will likely be similar to those in the Lula Field, Michelucci said.

Lula, which is owned by Petrobras, Britain's BG Group Plc and Galp, is part of an 8 billion barrel area that is one of the largest discoveries in the world in the last three decades. The area holds enough oil to supply all current needs in the United States for about 14 months.

Lula produced an average 97,000 boepd in October, according to Brazil's oil regulator the ANP, making it the seventh-largest producing area in the country. The largest amount of oil was produced by Lula's 7LL3DRJS well, which produced 36,025 barrels a day in the month.

Drilling stopped in Carcará before reaching its planned depth of 7,000 meters below the seabed because of rising costs and increasing difficulty related to subsea rocks, Michelucci said.

The well cost more than $300 million to drill, QGEP said. The well on Carcará is now being temporarily closed as Petrobras, which operates the area, and its partners assess the drilling to assess links to the Bem-te-Vi prospect in the same BM-S-8 block, QGEP said.

QGEP shares fell 1.6 percent to 12.92 reais on Sao Paulo's BM&FBovespa exchange in afternoon trading on Thursday. Petrobras preferred shares, the company's most-traded class of stock, rose 2.39 percent to 20.19 reais.

Galp shares rose 0.9 percent to 12.33 euros in Lisbon to trade at their highest levels in more than a month.

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