RIO DE JANEIRO, July 13 (UPI) -- First tests at Brazil's offshore Franco field added another 50,000 barrels a day of crude oil to the Latin American country's reserves amid a mixture of celebration and caution in the aftermath of the Gulf of Mexico environmental disaster.
Brazil, like Canada and other countries with major newly discovered hydrocarbon reserves, has reacted to BP's Deepwater Horizon woes with measures designed both to forestall a similar debacle and to manage global media if a similar incident happens.
Most of Brazil's newly discovered oil is deep under the seabed and tens of miles from the mainland. As Brazil's proven oil reserves rose with new discoveries, the government launched a series of military refurbishment plans but not, apparently, any immediate countermeasures against a media fallout and financial costs of an accident.
The Deepwater Horizon disaster changed that perspective, however, as it did elsewhere that new underwater discoveries became public in 2009 and this year.
Analysts said the Deepwater Horizon disaster would continue to be, at best, a cautionary tale for offshore oil prospectors and, at worst, a disincentive for further investment in deep-water drilling for hydrocarbons.
Concerns over a Gulf of Mexico-style mishap occurring in the North Falkland basin, the South Atlantic scene of current drilling for hydrocarbons in the British overseas territory, put off some investors. But the lure of profits from huge oil reserves has proved overpowering, despite risks of a fresh conflict with Argentina over the Falklands.
The Deepwater Horizon tragedy would continue to overshadow all offshore oil drilling for the foreseeable future, analysts said.
The latest Brazilian drilling results followed work on the Franco sub-salt field, which is said to hold 4.5 billion barrels equivalent of recoverable oil. Brazil's National Oil Regulatory Agency said first results showed the state-owned 2-ANP-1-RJS well has light oil measuring about 30 degrees API.
Estimates of the 4.5 billion barrels equivalent reserves were further verified by Gaffney Cline & Associates, who conducted assessment studies in both Franco and Libra areas under the subsalt layer of Brazil's Santos basin.
The Santos Basin is a 136,010-square-mile offshore region in the southern Atlantic Ocean about 190 miles southeast of Sao Paulo. The basin is the site of several significant oil fields, including Tupi and Jupiter, discovered in 2007 and 2008. Tupi was the largest oil discovery in the Americas since Mexico found Cantarell in 1976.
Analysts said ANP would likely use state ownership of Franco to swap drilling production rights with shares in the state-managed Petroleo Brasileiro S.A. Since the large discoveries, Petrobras has embarked on ambitious plans to invest tens of billions of dollars into developing Brazil's oil production and export potential.
Under new rules approved by Petrobras board, smaller investors will be able to use Treasury bonds as payment for new shares in a planned $25 billion offering, part of the company's financing program.
Current plans calls for a total $224 billion investment in the oil industry expansion program through 2014.
The government, which owns 56 percent of the voting stock in Petrobras, plans to buy shares with bonds. As part of the transaction, Petrobras will then sell the bonds back to the government in exchange for as much as 5 billion barrels of deep-water oil reserves.
Meanwhile, Petrobras signed up Hill & Knowlton public relations agency to deal with the media in preparation for the launch of its deep-water sub-salt drilling.
Although Petrobras sources said the hiring was part of a global marketing plan hatched before the Gulf of Mexico disaster, analysts said the scale of Brazil's planned deep-water drilling necessitated media management on a wider scale than originally thought.