January 8, 2013 / 1:46 PM / in 5 years

UPDATE 1-Brazil's Petrobras says it finds good quality oil in Santos Basin

* Area may be linked to giant Lula Field

* Exploration to continue until September 2014

Jan 8 (Reuters) - Brazil’s state-run oil company Petroleo Brasileiro SA found good quality oil in the sub-salt South Tupi prospect in the Santos Basin, one of the world’s most promising oil frontiers, according to a securities filing on Tuesday.

Petrobras, as the company is known, will continue exploration until it can declare the area commercially viable in September 2014. Preliminary evaluations indicate it may be linked to the giant Lula Field that is part of one of the world’s largest finds in 30 years.

Crude in the 4-RJS-698 well was discovered at a depth of 2,188 meters (7,178 feet), 302 kilometers (187.7 miles) off the coast of Rio de Janeiro state. Drilling can continue to 5,600 meters, Petrobras said.

The prospect is in an area controlled by Petrobras to the south of the Lula Field. It was assigned in 2010 in one of the largest oil-for-share swaps in history.

The Lula Field is part of an 8 billion barrel area owned by Petrobras, Britain’s BG Group Plc and Portugal’s Galp Energia SGPS. It holds enough oil to supply all current needs in the United States for about 14 months.

If the areas are indeed connected, there will be negotiations so that Petrobras operates the new prospect jointly with the concession operating the Lula Field.

Petrobras, which accounts for 90 percent of Brazil’s oil and gas output, has been criticized for its slow increase in output since the discovery of massive subsalt oil fields off the coast in 2007.

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