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Petrobras confirms new oil fields near Northeast coast

BY JEFF FICK
 
RIO DE JANEIRO -- Petrobras has discovered oil fields in a new area off the country´s northeast coast that are closer to shore and could be cheaper to develop than larger discoveries further south, the company confirmed.

The oil fields found in the Sergipe-Alagoas Basin should start producing about 100,000 bpd of crude oil in 2018, Petrobras CEO Maria das Gracas Foster told reporters. The executive declined to estimate the amount of oil present in the fields, although geologists said they could potentially hold billions of barrels of crude.

"This is an excellent new frontier," said Hernani Chaves, the top oil geologist and researcher at the State University of Rio de Janeiro, or UERJ.

The area' s potential caused Petrobras to embark on an intense exploration campaign in 2008, striking oil or natural gas in 13 of the 16 wells that the company drilled. "The results we' ve had so far have been very good," Ms. Foster said.

Petrobras´s long history of production on land in Sergipe state means that some of the infrastructure needed to bring production onstream already exists, helping to reduce costs and logistical challenges. While the oil fields sit in water 2,500 m deep, they are about 150 km from the coast, making transportation of workers to and from oil platforms much easier when compared to the presalt region further south.

Brazil' s presalt area off the coasts of Rio de Janeiro and Sao Paulo states, where billions of barrels of crude were discovered, are found about 300 km from the coast and face enormous logistical challenges. The oil is trapped about 7,000 m under the surface of the Atlantic Ocean below a thick layer of salt. No such salt layer exists in the Sergipe-Alagoas Basin, removing another expensive obstacle to development, geologists said.

In October, Brazil will auction the first presalt oil field under new production sharing agreements. The Libra field is estimated to hold between 8 and 12 Bbbl of recoverable oil. Winning bidders will have to pay a signing bonus of about $7 billion and partner with Petrobras, which is obligated to operate the field and hold a 30% stake.

The list of potential bidders was dominated by Asian national oil companies, but oil majors such as Exxon Mobil, Chevron and BP opted to sit out the auction amid concerns about the new rules and high price tag.

Petrobras' s success also has researchers rethinking their models for the offshore region, where the shallow water areas not yet explored were estimated to hold only between 500 MMbbl and 1.5 Bbbl of recoverable reserves, said Cleveland Jones, a researcher who works with Mr. Chaves at UERJ.

The discoveries off the coast of Sergipe show why, despite Libra' s potentially massive reserves, drilling for oil in Brazil' s less explored areas could be more lucrative for major oil companies.

The finds are "an indication of the kind of potential there exists all along Brazil' s coast," said Mr. Jones. "Why would oil companies kill themselves and get pennies on the dollar when they could find a couple million barrel oil field and make big money."

Petrobras operates most of the exploration blocks containing the new discoveries, holding a 60% stake. The remaining 40% is held by IBV-Brasil, a joint venture between Indian companies Bharat Petroleum Corp. and Videocon Industries Ltd.

Videocon Group Chairman Venugopal Nandlal Dhoot couldn' t immediately comment about the oil fields, saying that he has yet to hear from the company´s team in Brazil. Bharat Petroleum Chairman R.K. Singh didn´t respond to phone calls seeking comment.

Dow Jones Newswires

09/29/2013

 

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