Oil and Gas

Brazil oil firm OGX says offshore well disappoints

* Ilheus well shows sub-commercial crude reserves

* Company to continue drilling in BM-S-58 block

RIO DE JANEIRO, Jan 11 (Reuters) - Brazilian oil and gas startup OGX OGXP3.SA, owned by billionaire industrial magnate Eike Batista, said on Tuesday that reserves found in a well in the offshore Santos Basin were not commercially viable.

OGX said the well known as Ilheus was drilled to a depth of 5,623 meters (18,448 feet) in shallow waters of the Santos Basin in the BM-S-58 block. It contains crude but not enough for commercial exploitation, the firm said in a securities filing.

OGX general director of exploration and production Paulo Mendonca said in a telephone interview the company plans to continue drilling in that block, adding it expects better results in the next well.

“We already have three discoveries in Santos and I’m certain that our next well, called Salvador... will also yield a discovery,” Mendonca said.

The company, which has exploration activity in 29 blocks in Brazil, is mostly focused on shallow water areas rather than the deep water projects in a region known as the subsalt that the government hopes will turn the country into a major oil exporter.

It is in talks to sell minority stakes in some of its blocks following a string of discoveries in the Campos Basin off the coast of Rio de Janeiro. (Reporting by Denise Luna, Writing by Brian Ellsworth; Editing by John Picinich)