December 30, 2011 / 7:40 AM / 7 years ago

REFILE-UPDATE 2-Brazil passes key mark on second sub-salt oil development

* Guara to hold 2.1 bln boe in recoverable reserves

* Second major field in Santos subsalt declared commercial

RIO DE JANEIRO, Dec 29 (Reuters) - A second major sub-salt oil development in Brazil passed a critical milestone on Thursday when operator Petrobras and its partners declared the Guara field commercially viable.

The field in Brazil’s Santos basin, south of Rio de Janeiro, holds an estimated 2.1 billion barrels of recoverable oil and natural gas equivalent (boe) reserves, Petrobras and its partners BG Group and a Repsol-Sinopec joint venture said in a securities filing.

That figure is at the high end of the previous 1 billion to 2 billion barrel estimate.

While the field had been producing small volumes of crude for more than a year and was widely expected to move to full-scale operation, the formal declaration is important because it allows the companies to include the resources as part of their proven reserves under Brazilian and international securities regulation and to begin formal production under Brazilian law.

The declaration still has to be approved by Brazil’s petroleum regulator ANP.

This is the second commercial find in Brazil’s subsalt areas, which contain the two largest oil discoveries in the Americas in the last three decades, and is considered one of the most promising oil frontiers outside of the Organization of Petroleum Exporting Countries (OPEC).

Petrobras and its partners BG and Portugal’s Galp declared the nearby Lula and Cernambi fields in December 2010.

The news marks a success for Chinese oil giant China Petroleum & Chemical Corp (Sinopec), which bought a 40 percent stake in Repsol’s Brazilian venture a year ago for $7 billion, hoping to get a foothold in the booming sector.

The Santos subsalt region is the most promising slice of the larger New York state-size geographic basin off Brazil’s coast that contains an estimated 50 billion to 100 billion barrels of oil and natural gas equivalent. That is enough to supply all oil needs for the U.S. for seven to 15 years.

Petrobras preferred stock rose 0.28 percent to 21.49 reais in Sao Paulo on Thursday, before the announcement was made.

Petrobras owns 45 percent of the BM-S-9 block where the Guara field is located; BG has a 30 percent stake with the remainder owned by Repsol Sinopec Brasil, a partnership between Spanish oil company Repsol and Sinopec.

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