PETROLEO BR SP ADR : pre-salt 30 -70 billon barrels

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06 sept. 2008 •12:31

Brazil May Have 70 Billion Barrels of Oil Near Tupi (Update1)
By Jeb Blount and Juan Pablo Spinetto

Sept. 5 (Bloomberg) -- Brazil has between 30 billion and 70 billion barrels of oil in its so-called pre-salt fields near the Tupi discovery off the coast of Rio de Janeiro state, said Julio Bueno, the state's economic affairs secretary.

The oil estimate refers to fields previously discovered by Petroleo Brasileiro SA, Brazil's state-controlled oil company, BG Group Plc and other companies in the Santos Basin, Bueno said today in an interview with Bloomberg Television in London.

``We think that in the areas that Petrobras and other companies have already discovered we have 30 billion to 70 billion,'' said Bueno, a former Petrobras executive. ``It's not an easy task to say how much you have, but it's a good amount to think about.''

About $600 billion will be needed to develop the pre-salt resources, an amount that will require involvement from both Brazilian and non-Brazilian oil companies, Bueno said. The Tupi field may have as much as 8 billion barrels of recoverable oil, Petrobras said in November, making it the largest oil discovery in the Americas since 1976.

Bueno favors retaining Brazil's existing rules and regulations governing oil exploration and believes a national debate over how to spend revenue from the new fields will not end with restrictions on foreign investment.

``The law is very nice and running well,'' he said. ``We need foreign investment and technology. We need an open system.''

Relationship With Lula

Rio de Janeiro-state's position as Brazil's main oil- producing region and its governor Sergio Cabral's close relationship with Brazilian President Luiz Inacio Lula da Silva will help ensure that major changes to the country's oil lease system aren't made, Bueno said.

Brazil currently leases its oil rights to private companies at auctions and the companies can sell the oil they produce. The discovery of the new fields has initiated a discussion about how to increase the government's share of oil revenue and whether the state should take a bigger role in managing oil development.

To contact the reporters on this story: Jeb Blount in Rio de Janeiro at jblount@bloomberg.netJuan Pablo Spinetto in London at jspinetto@bloomberg.net