Analysis: Brazil seeking new oil fortunes

MIAMI, Aug. 27 (UPI) -- Brazil is preparing to expand its search for additional offshore oil fields beyond its most recent finds off the coast of Sao Paulo state.

State-run oil firm Petrobras announced earlier this week that it was beginning exploration off the coast of the southern state of Santa Catarina.

Exploration experts at Petrobras expressed confidence that they would make fresh discoveries in an uncharted area of Brazil's ocean floor yet to be examined for oil.

Petrobras Exploration and Production Manager Francisco Nepomuceno said the company expects to locate oil reserves both above and below the salt level, some at depths exceeding 30,000 feet below the surface of the water and seabed, Gazeta Mercantil newspaper reported.

Brazil's recent discoveries of fields off the coast of Sao Paulo has Petrobras officials clamoring to add to their recent portfolio of findings, the largest of which is the Tupi oil field, believed to hold somewhere between 5 billion and 8 billion barrels of oil.

Brazilian energy officials said they hoped to have Tupi production up and running by 2010.

However, Tupi and other nearby discoveries are up to tens of thousands of feet below the surface, a depth that some assert could prove problematic come time for extraction.

While new discoveries have officials contemplating a future in which Brazil is among the world's leading oil producers, much of Brazil's potential offshore oil wealth remains just that, say some experts.

"All of the findings so far are probable. … They aren't proven yet," Jorge Pinon, energy fellow for the Center for Hemispheric Policy at the University of Miami, told United Press International.

Along with uncertainty about just how much oil lies beneath the Atlantic off Brazil is the difficulty in retrieving it from beneath thousands of feet of water and salt deposits under the ocean floor.

Though Petrobras is a world leader in offshore oil drilling, extracting oil from extreme depths is a difficult and costly endeavor, Pinon noted.

"It's not that Brazil doesn't have the technological know-how -- the industry as a whole doesn't have the experience," he said. "It's a new geological frontier."

Others contend that Brazil's wealth of experience in deepwater drilling will allow it to make good on its projected timetable for production to begin in Tupi.

"As one of the industry's premier deepwater players, Petrobras absolutely has the ability to profitably develop recent huge discoveries," said Michael Lewis, an analyst with PFC Energy.

Difficulties aside, a new find could prove to be yet another example of Brazil's recent fortunes in the petroleum sector.

In 2006 Brazil became a net exporter of oil after decades of dependence, though it still must import light crude for domestic use.

A year later Petrobras unveiled its discovery of the Tupi. The field became the first of a string of discoveries off the shore of Sao Paulo that energy officials boasted would place Brazil among the ranks of the world's largest petroleum exporters. At the time, Petrobras officials said the discovery of the Tupi oil field could launch Brazil into the Top 10 oil producers in the world.

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