Dec. 9 (Bloomberg) -- Petroleo Brasileiro SA, Brazil’s state-controlled oil company, may be able to produce oil from its pre-salt fields in a pilot program for less than $40 a barrel, the company’s investor relations manager said.

“We’re optimistic that we can produce oil at a cost below $40 a barrel in pilot production in the pre-salt oil fields,” said Theodore M. Helms, investor relations executive manager, said today during an investor conference in New York.

Petrobras, as the oil company is known, has approved a pilot production project in its Tupi oil field to begin by the end of 2010 and produce 100,000 barrels a day, Helms told investors. The project will include five producing wells and three injection wells, Helms said. The so-called pre-salt areas are underwater oil fields beneath a layer of salt.

“Logistics issues in pre-salt oil fields would be offset in terms of cost by the productivity of the fields assuming the size of these reserves,” Helms said. “No one can say yet what the breakeven price of producing oil in pre-salt fields is because there are a number of unknown factors. There will also be a learning curve.”

Tupi

Petrobras on Nov. 21 said it found light oil in two wells off the coast of Brazil’s Espirito Santo state, expanding its pre-salt discoveries in an area that’s already producing crude. Petrobras said in November 2007 that Tupi, off the coast of Rio de Janeiro, may hold an estimated 5 billion to 8 billion barrels of recoverable oil, making it the largest oil discovery in the Americas since 1976.

Helms said Petrobras will invest about $30 billion this year, half of which will go to Brazilian exploration and production projects.

The oil company this week said it raised $7.5 billion this year to finance investments. Petrobras said in a regulatory filing that it has always borrowed funds in the domestic and international markets.

Helms said there are “ongoing” negotiations with the Chinese development bank for Petrobras to obtain financing from China for its investments. Helms declined to confirm whether the Brazilian state-controlled oil company is seeking a $10 billion loan from China to fund pre-salt oil exploration.

Petrobras slid 0.5 percent to 20.11 reais, after rising as much as 3.7 percent earlier. The stock has lost 54 percent this year, compared with a 40 percent decline for Brazil’s Bovespa index.

To contact the reporter on this story: Fabio Alves in New York at falves3@bloomberg.net.

Last Updated: December 9, 2008 16:03 EST