PBR-Campos Basin Tupi discoveryThe geology offshore eastern South America corresponds with the geology offshore western Africa: the oil-bearing continental shelf offshore Brazil and the oil-bearing continental shelf offshore Angola are really exactly the place, separated by about 20 million years of ocean floor spreading. The offshore Brazilian fields, including the massive newly discovered Tupi field, are intriguing for us because they are analagous to the offshore Angolan fields, and suggest Block 1711 just south of the Namibian-Angolan border might host a giant similar to Tupi; at least the partners here think it's worth spending an initial $60 million to investigate the potential indicated by their seismic data. The future development costs, like tax problems for the newly rich, will for speculators here come under the heading of "Nice Problems to Have"...
Tupi field a boost for Brazil’s Petrobras
By Sheila McNulty in Houston and agencies
Published: November 8 2007 22:43 | Last updated: November 9 2007 08:38
Petroleo Brasileiro, or Petrobras, Brazil’s state-owned oil company, on Thursday said well tests revealed its Tupi field may contain as much as 8bn barrels of oil and natural gas, which would considerably bolster the country’s energy clout.
The estimate, if correct, would raise the country’s reserves by 62 per cent and just about put Tupi on par with Norway’s 8.5bn barrels of proved oil reserves.
EDITOR’S CHOICE
Brazil’s Tupi field gives companies a lift - Nov-09Lex: Brazilian oil discovery - Nov-09Editorial comment: Lubricating oil - Nov-09State groups give majors a run for their money - Nov-09Special report: Energy - Nov-09Brazil to sell licences for oil exploration - Sep-26Brazil has 14.4bn barrels of proved reserves of oil and natural-gas equivalent.
The news pushed up Petrobras’ shares 9.95 reais, or 14.2 per cent, to 80.2 on the São Paulo stock exchange, the biggest rise in more than nine years.
It also lifted the share price of BG Group, which holds a 25 per cent stake in the field for a second day. BG shares opened 33p higher at £10.22, following Thursday’s 10 per cent advance.
Shares in Galp Energia of Portugal, which holds 10 per cent, also rose for a second session. The shares, which had their biggest one-day gain in Lisbon on Thursday, rose 21 per cent €2.60 on Friday to €14.95.
Petrobras’ news release contained few details beyond the fact that the estimates were made after analysis of the formation tests for a second well in the area.
The company also said the oil within was light, which is more valuable because it is cheaper to refine than the heavier crude oil that Brazil mostly produces.
“Tupi changes everything for Brazil and Petrobras,’’ said Carlos Renato Nunes, an oil analyst with São Paulo-based brokerage Coinvalores CCVM who has a buy recommendation on Petrobras shares.
“Tupi is not only huge, its light oil offers huge cost advantages.’’
And at a time when oil is heading towards $100 a barrel, and energy security is high on the agenda of many governments, the news is sure to boost Brazil’s economic influence. Petrobras, already a well-respected national oil company on the world stage, is likely to receive a further boost from the discovery.
“Brazil needs time to evaluate its new oil potential,’’ Dilma Rousseff, president Luiz Inacio Lula da Silva’s cabinet chief, said at a news conference in Rio de Janeiro.
“This could make Brazil jump from an intermediate producer to among the world’s largest producers.’’
Tupi is three-quarters the size of Kazakhstan’s Kashagan field, which holds 12bn barrels of recoverable crude and was the biggest find in the past 30 years.
There have only been a few gas discoveries in the past 20 years that would rival it, including the Shtokman field in Russia at 23bn barrels of oil equivalent, and two other Russian finds in the 5bn to 10bn range, Andy Latham, vice-president of exploration services at Wood Mackenzie Consultants in London, said.
Copyright The Financial Times Limited 2007
From Times OnlineNovember 9, 2007
Petrobras soars on 1m barrel-a-day Tupi find
Petrobras' discovery of the Tupi reserve off the coast of Rio could make Brazil a major oil exporter by 2015Carl Mortished, World Business Editor
Tupi is the biggest oil discovery for seven years and it should boost Petrobras, which discovered the giant field offshore of Rio de Janeiro, into the superleague of hydrocarbon giants.
The New York Stock Exchange doffed its cap to the Brazilian State oil company yesterday, adding 14 per cent to its value and in London, Petrobras’ partner, BG Group, gained 5 per cent but the real significance of this find is greater than money.
Tupi is a world class resource - its estimated reservoir of between 5 and 8 billion barrels is not just a pool of energy but a political weapon that Brazil’s government will exploit to its maximum potential.
The minimum estimate of Tupi’s recoverable barrels is equal to the entire remaining oil in the North Sea and Wood Mackenzie reckons production will be at least 1 million barrels per day. The consultancy sees Brazil as a major oil exporter by 2015 and the significance is not lost on its government. Brazil’s oil minister has withdrawn from a forthcoming auction of licences to international companies all acreage with similarities to the Tupi geology.
Related Links
BG Group dismisses persistent bid rumours
Petrol breaks £1 barrier as oil nears $100
PetroChina tops Exxon as world's largest group
Brazil is about to become a petrostate and a country that is already flexing its muscles vigorously in world trade fora will raise its voice a little bit louder. Even as Petrobras was crowing over its discovery yesterday, Brazil joined forces with Canada to sue the US over its trade-distorting farm subsidies. This time the US will have no choice but to listen. America needs more oil and Brazil is a friendly neighbour, sort of.
Brazil is the principal opponent of America and Europe at the World Trade Organisation, leading the attack by the emerging market nations against rich nation farm subsidies and quotas. Brazil has won cases against the EU over sugar quotas and against the US over cotton subsidies. It’s latest campaign is to bring down America’s tax on imported ethanol, used as a biofuel additive in petrol. The Tupi discovery will add a powerful lever to Brazil’s argument that America must open its doors to a clutch of ambitious Brazilian industrialists who want to turn Brazil’s sugar cane plantations into an ethanol factory for export to the US.
Brazil will soon have lots of friends; Chinese oil ministry officials will already be booking flights to Rio. But Brazil is no African republic, eager for a quick deal. Customers for Tupi’s barrels might be expected to offer something more than a wad of cash.