July 12 (Bloomberg) -- Petroleo Brasileiro SA, Brazil's state- controlled oil company, opened a new exploration frontier with the discovery of oil beneath more than two kilometers of ocean and two kilometers of rock, Chief Executive Officer Sergio Gabrielli said.

While Petrobras doesn't know the extent or size of the oil deposits found about 250 kilometers off the shore of Rio de Janeiro, it is the first time oil has been found under such conditions, offering the chance that Petrobras may increase the production of light crude oil faster than expected, Gabrielli said in an interview.

The discovery may be as large as the Campos Basin, Brazil's largest offshore district, said Haroldo Lima, head of Brazil's national petroleum agency, or ANP, in an interview. Brazil produces 1.5 million barrels a day in Campos, or more than three quarters of its 1.9 million barrels a day Brazilian production and more than two thirds of its 2.3 million barrel total daily worldwide output, according to Petrobras's Web site.

``It's a new frontier in deeper formations,'' Gabrielli said. ``If things work out it will take us six to seven years to develop the field.''

Petrobras's board on June 30 approved a 66 percent expansion of investments to $87.1 billion for the 2007-2011 period. Petrobras, which is spending about $4 billion a year just to maintain current production levels, expects the expansion will help it find new reserves to double production to about 4.5 million barrels a day in 2015, Gabrielli said.

The discovery, made in partnership with BG Group Plc and Petrogal SA, in ``ultra-deep water'' and under a deep band of rock salt below the ocean floor, shows signs of new oil layer beneath much of Brazil's existing oil reserves of 13 billion barrels to 14 billion barrels, Lima said.

While the petroleum found in the new field is mostly light oil, a planned doubling of light-oil production by 2015 won't change Petrobras's status as a heavy-oil producer or reduce its commitment to upgrading its refineries to handle heavy-grades of crude that are more expensive to refine, Gabrielli said.

Petrobras preferred shares rose 2 centavos, or 0.1 percent to 43.81 reais in Sao Paulo.

To contact the reporter on this story: Jeb Blount in Rio de Janeiro at jblount@bloomberg.net

Last Updated: July 12, 2006 17:44 EDT