Brazil oil find may be one of world’s largest
Brazil’s offshore Libra oil prospect contains approximately 8 billion barrels of oil, a government energy official said on Monday, vastly boosting a previous estimate of 5,5 billion barrels and possibly making it the second-largest crude discovery in a decade.
The area could be included in the first tenders of fields in the vast deepwater region known as the subsalt, once Congress approves a new production sharing system for oil fields in that region.
“Libra, which according to estimates has up to 8 billion barrels of recoverable reserves, should be one of the first under the production sharing model,” said Marco Antonio Almeida, Secretary of Oil and Gas for the Mines and Energy Ministry.
Magda Chambriard, a director for Brazil’s ANP energy regulator, said energy consultancy Gaffney, Cline & Associates had estimated that field’s volume at 7,9 billion barrels. ANP Director General Haroldo Lima in August said the area probably held around 5,5 billion barrels.
Almeida said exploration work would be completed on the area within 15 to 30 days.
The news would make Libra the world’s number two crude discovery since the 17,2 billion barrel Kashagan find in Kazakhstan in 2000, according to Wood Mackenzie data based on barrels of oil equivalent.
It would also rival the 5 billion to 8 billion barrel Tupi discovery announced in 2007 that put the global spotlight on Brazil’s offshore deep water region, which the South American nation hopes will turn it into a major energy exporter.
Ruaraidh Montgomery, senior analyst in Latin America Upstream Research at Wood Mackenzie, described the figure as “massive” but sounded a note of caution given the estimate appears to come from only one well drilled in the area.
“That’s an awfully big number to announce just off the back of a single well,” said Ruaraidh Montgomery, senior analyst in Latin America Upstream Research at Wood Mackenzie. “It’s not to say that it isn’t true, but it would help to have more information.” Oil companies increasingly see Brazil as a future source of energy as easy-to-reach reserves dry up or are located in countries racked by violence, such as Iraq, or have governments that place obstacles to foreign investment, such as Venezuela.
The ANP hired state oil company Petrobras to drill an exploration well in the Libra field to help the government find oil to be used in an oil-for-shares swap linked to a massive Petrobras share offer.
But authorities decided not to use that field in the swap after Petrobras ran into an operational problem while drilling the first well there. That snag prevented authorities from evaluating the size reserves in time to use them in the swap.
Libra is near the offshore Franco area, which will supply most of the oil for the Petrobras plan and is believed to hold around 4,5 billion barrels.
As part of the oil-for-shares agreement, the government and Petrobras unveiled an additional 2 billion barrels in the subsalt area that had been found through seismic exploration, most of that in areas adjacent to existing discoveries.
Though the subsalt reserves have grabbed the attention of oil companies around the world, bidding rounds for those areas have been stalled since 2007 when President Luiz Inacio Lula da Silva halted tenders while the government rewrote oil laws.
Congress still has not approved the principal element of that overhaul: a change from the existing concession system to production-sharing contracts that Lula says are necessary to ensure the state receives its fair share of the reserves.
Those changes would also make Petrobras the sole operator of new projects in the subsalt region and give it a minimum 30% stake in those projects.
Almeida said he expects the first auctions take place during the first semester of 2011. In that auction the government would likely offer the Libra field together with at least one other area.