Sept. 10 (Bloomberg) -- Petroleo Brasileiro SA, Brazil's state-controlled oil company, said its previously discovered Iara oil field contains an estimated 3 billion to 4 billion barrels of recoverable light crude oil, enough to supply the country for about five years.

The estimate is the first for the field, which was announced in August. It includes both oil and natural gas equivalent. The field is owned by Petrobras, as the company is known, and its partners, the U.K.'s BG Group Plc, and Portugal's Galp Energia SGPS SA. The oil is rated at 26 to 30 degrees on the American Petroleum Institute scale, the Rio de Janeiro-based company said today in an e-mailed statement.

``This will be highly beneficial to Petrobras and its partners in a world where there seems to be a general lack of large light, sweet crude discoveries,'' Ted Harper, senior research analyst with Frost Investment Advisors in Houston, said by phone. Frost Investment Advisors manages the equivalent of $2 billion of stocks and bonds, including Petrobras, Harper said.

Iara is in the Santos Basin to the north of Tupi, a 5 billion- to 8 billion-barrel field announced in November that is the largest oil find in the Americas since 1976. If confirmed, Iara and Tupi, which sit in non-adjacent parts of the same BM-S- 11 exploration block, could almost double Brazil's 12.6 billion barrels of proven oil reserves, according to London-based BP Plc.

Brazil consumed an average 2.19 million barrels a day of oil in 2007, BP said.

August Discovery

The Iara estimate is based on a well drilled in 2,230 meters (7,315 feet) of water. The final well depth is 6,080 meters. When the discovery of oil in the well was first announced on Aug. 11, the well was still being drilled in search of deeper objectives, Petrobras said.

The find lies in an exploration layer known as the ``pre- salt,'' 227 kilometers east-southeast of the city of Rio de Janeiro. Petrobras has not said if Iara is an extension of Tupi. Unleased areas sit between the two parts of the exploration block.

``The volume is impressive because of the relatively small area of Iara when compared with Tupi,'' said Breno Guerbatin, an energy analyst at BNY Mellon Arx, which manages the equivalent of $5 billion of assets in Rio de Janeiro. ``But it's more than volume. This announcement is important because nobody was expecting Petrobras to announce new volume estimates before mid- 2009.''

Quality Exceeds Expectations

The quality and thickness of the deposit exceeded expectations, Petrobras said. The Iara portion of the block is less than a quarter of the size of the Tupi portion according to a map supplied by Petrobras.

Petrobras owns 65 percent of the field and operates it, BG owns 25 percent and Galp owns 10 percent.

Petrobras preferred shares, its most-traded class of stock, rose 33 centavos, or 1.2 percent, to 28.68 reais in Sao Paulo before the Iara announcement was made.

To contact the reporters on this story: Jeb Blount in Rio de Janeiro at jblount@bloomberg.net and; Heloiza Canassa in Sao Paulo at (55- hcanassa@bloomberg.net

Last Updated: September 10, 2008 19:52 EDT