Tupi profitable even with lower oil prices - Galp

LISBON, 21 Oct (Reuters) - Oil recovery from the giant Tupi field in Brazil's Santos Basin will be profitable even if crude prices drop substantially from their current levels, Manuel Ferreira de Oliveira, CEO of Galp (GALP.LS), said on Tuesday.

The Portuguese oil and fuel company has a 10 percent stake in the consortium exploring the subsalt Tupi reserve. The group is led by Brazilian state-owned oil company Petrobras (PETR4.SA) and also includes British gas producer BG Group Plc (BG.L).

"Tupi is a gigantic reserve which is profitable at substantially lower oil prices than the current ones," Ferreira de Oliveira told reporters during an energy conference.

Ferreira de Oliveira said Galp's investments are not at risk, and have been tested to protect their long-term viability. "Investments in this sector are not based on today's prices but on projections for prices in 20 years," he added.

Goldman Sachs said in a research note last week that the recent abrupt decline in oil prices could put the profitability of the planned Tupi investments at risk, adding that these may only be viable if oil prices remain above $70 per barrel.

The Tupi oil lies beneath a thick layer of salt deep under the ocean floor, which makes exploration and production costly and technologically-challenging.

Brazilian Energy Minister Edison Lobao told Reuters earlier this month Tupi production costs would not exceed $40-$50 per barrel and at this level would be "absolutely competitive". He said the cost, which includes the government take, compares to $32 for other, easier to drill projects in Brazil.

Petrobras last November announced a recoverable reserves estimate for Tupi of between 5 billion and 8 billion barrels. Galp is Petrobras' partner in several other oil discoveries. (Reporting by Elisabete Tavares, writing by Shrikesh Laxmidas, Editing by Peter Blackburn