Nov. 8 (Bloomberg) -- Petroleo Brasileiro SA, Brazil's state-controlled oil company, said its Tupi field may contain as much as 8 billion barrels of oil and natural gas, an amount that could boost the country's reserves by 62 percent. The company's shares rose the most in more than nine years.

The announcement led a gain in the Brazilian stock market and boosted BG Group Plc and Galp Energia SGPS SA, partners in the field. The estimate for Tupi was made after a test well confirmed expectations, Petrobras, as the company is known, said today in a statement on its Web site. Tupi's total estimate would almost match that of Norway's 8.5 billion barrels of proved oil reserves, according to an estimate by BP Plc.

Brazil has proved reserves of oil and natural-gas equivalent to 14.4 billion barrels, Petrobras Chief Executive Officer Jose Sergio Gabrielli told reporters in Rio de Janeiro today. The oil at Tupi, located in the offshore Santos Basin, is a light grade, more valuable and cheaper to refine than the heavy crude that dominates Brazilian output.

``Tupi changes everything for Brazil and Petrobras,'' said Carlos Renato Nunes, an oil analyst with Sao Paulo-based brokerage Coinvalores CCVM who has a buy recommendation on Petrobras shares and doesn't own any. ``Tupi is not only huge, its light oil offers huge cost advantages.''

Nunes plans to increase his share-price estimates for Petrobras as a result of the find.

Petrobras' reserves of 13 billion barrels of oil and gas equivalent at the end of 2006 ranked fourth behind Exxon Mobil Corp., PetroChina Co. and BP, according to data compiled by Bloomberg.

`Tiny Part'

The Tupi finding, which Petrobras estimates contains at least 5 billion barrels of oil and gas, is just a ``tiny'' part of a new oil province that the company believes is beneath existing fields, Gabrielli said. The potential new reserves may boost Brazil's oil reserves from the 17th biggest in the world to among the top 10, he said.

The Tupi field is in a region that lies about 250 kilometers (402 kilometers) off the coast of Rio de Janeiro in water as much as 3 kilometers deep. The oil rests a further 5 to 7 kilometers below the ocean floor.

Petrobras will be able to start producing from the field in five to six years, Gabrielli said. They may be able to start producing about 100,000 barrels a day from the field as early as 2010 or 2011, said Guilherme Estrella, Petrobras' exploration and production chief.

``That would only be a very small amount of the field's potential,'' Estrella said.

LNG, Power Generation

Petrobras is also studying plans to either liquefy or compress natural gas in the Tupi field aboard ships for transport to Brazil or use the gas to generate electricity on floating generating stations, Estrella said.

``This could make Brazil jump from an intermediate producer to among the world's largest producers,'' Dilma Rousseff, President Luiz Inacio Lula da Silva's cabinet chief, said at a news conference in Rio de Janeiro.

As a result of the discovery, the government has removed 41 oil exploration blocks out of 312 up for sale later this month to reevaluate their potential, Rousseff said. All of the blocks in Brazil's Campos, Santos and Espirito Santo basins, the three most important in the country, have been pulled from the auction, she said.

``This allows us to reevaluate our resources without breaking any existing contracts,'' she said. ``When we are better aware of the potential, we will consider offering them at auction again.''

Shares Rise

Petrobras preferred shares, its most-traded class, rose 9.95 reais, or 14.2 percent, to 80.2 on the Sao Paulo stock exchange. That's the biggest gain since the stock climbed 18.2 percent on Sep. 15, 1998. The shares gained as much as 20 percent earlier today.

BG Group, with a 25 percent stake, gained 9.8 percent to 989 pence in London. Galp Energia, which holds 10 percent, posted its biggest one-day gain in Lisbon, rising 14 percent to a record close of 12.35 euros. The Bovespa Index climbed as much as 2.8 percent.

The Tupi oil is near Petrobras' main operations, so no major new installations will have to be built, Nunes said.

While it's possible to drill off some existing platforms, other big fields have experienced setbacks, said John Parry, an analyst at John S. Herold Inc. in Norwalk, Connecticut. BP Plc's Thunder Horse in the Gulf of Mexico has been delayed since 2005 because of storm damage and equipment failures.

By providing more light crude to Brazilian refineries, Tupi will free up more heavy crude, similar to Venezuelan oil, for Petrobras' refinery in Pasadena, Texas, Nunes said. Tupi may have enough oil to supply all U.S. needs for more than 14 months.

`Self-Sufficient Company'

Petrobras will have less need to export cheaper heavy crude and buy more expensive light crude to feed its refineries, which can't handle all the heavy oil the company produces.

``All that light crude has the potential of turning Petrobras from a net exporter of oil into a truly self-sufficient company,'' Nunes said. ``Their refineries can handle the oil and they'll be saved the losses on trading and costs of shipping to make fuel for Brazil.''

The field is three quarters the size of Kazakhstan's Kashagan field, which holds 12 billion barrels of recoverable crude and was the biggest find in the last 30 years.

``Even a 5 billion-barrel find number is the biggest find since Kashagan,'' said Andy Latham, vice president of exploration services at Wood Mackenzie Consultants Ltd. in London. ``This would be the number two for the past two decades for oil.''

Russia's Shtokman

There have only been a few gas discoveries in the past 20 years that would rival it, including the Shtokman field in Russia at 23 billion barrels of oil equivalent, and two other Russian finds in the 5 billion to 10 billion range, Latham said.

Tupi may also help reduce U.S. dependence on Venezuela, one of the U.S.'s main sources of imported oil.

``It punches a bit of a hole in Venezuela's bubble,'' Parry said. ``This certainly becomes a challenge to Venezuela, which is looking to get a Latin American coalition of countries together because Venezuela saw itself as the head honcho with the most reserves.''

To contact the reporter on this story: Carlos Caminada in Sao Paulo at at ccaminada1@bloomberg.net; Jeb Blount in Rio de Janeiro at jblount@bloomberg.net

Last Updated: November 8, 2007 17:30 EST