Analysis: Brazil finds new oil field

MIAMI, June 18 (UPI) -- A consortium of Brazilian and foreign oil companies has discovered yet another oil field off the coast of South America's largest country, adding to the already multibillion-barrel reserves found in Brazilian waters in recent years.

According to officials from Petrobras, Brazil's state-owned energy firm, the newly discovered light-oil deposit is some 190 miles off the coast of Sao Paulo state and at a depth of almost 2 miles below sea level, which in the Santos Basin averages about 1.5 miles from the ocean floor to the surface.

The find is the fifth major discovery by the group comprised of Petrobras, Britain's BG Group and Spanish energy giant Repsol.

Officials for all three companies have not speculated publicly about what the reserve could hold. However, a BG Group spokesman called the new find "very speculative."

"There is a new hydrocarbon province emerging in the waters off Brazil," a BG official told Britain's The Independent newspaper late last week. "This was very speculative, frontier exploration that has uncovered what is proving to be a major new province."

Though its volume is undetermined, the newest reserve has added to the considerable clout of the consortium led by Petrobras, which, following the announcement of its discovery, prompted the company's shares to rise more than 2.3 percent on Brazil's Bovespa stock exchange.

However, much of Brazil's potential off-shore 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 the 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."

Difficulties aside, the 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 use domestically.

A year later, Petrobras unveiled its discovery of the Tupi oil field, a reserve believed to hold between 5 billion and 8 billion barrels. The Tupi field became the first of a string of discoveries off the shore of Sao Paulo state 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.

While the string of discoveries has prompted excitement at home and has been a proven boost to Petrobras' share value, which has more than doubled in the last 12 months, some recommend exercising caution before declaring Brazil a bona fide petroleum giant.