Brazil Libra Field May Hold 16 Billion Barrels of Oil
Brazil's President Luiz Inacio Lula da Silva
Antonio Scorza/AFP/Getty Images
Brazil's President Luiz Inacio Lula da Silva.
Brazil's President Luiz Inacio Lula da Silva. Photographer: Antonio Scorza/AFP/Getty Images
Brazil said its deep-water Libra field may hold as much as 16 billion barrels of oil, twice previous estimates, which would make it the biggest crude discovery in the Americas in more than three decades.
The field in the Santos Basin off the coast of southeast Brazil may have 7.9 billion to 16 billion barrels of oil, said Haroldo Lima, the head of the national petroleum regulator known as the ANP, according to the agency’s press office. The government owns 100 percent of Libra.
“Government officials have always been excited about the prospects for Libra,” said Christopher Garman, director for Latin America at Washington-based researcher Eurasia Group. “The big challenge will be how to develop all this.”
Oil reserves of 16 billion barrels would make Libra the biggest find in the Americas since Mexico discovered Cantarell in 1976. It would be twice as big as state-controlled Petroleo Brasileiro SA’s nearby Tupi field, which has estimated reserves of between 5 billion and 8 billion barrels.
Libra and Tupi, both in Brazil’s Santos Basin, are located in a region known as the pre-salt, which runs 800 kilometers (500 miles) off the coast, holding oil deposits beneath a layer of salt resting as deep as 3,000 meters (9,800 feet) beneath the ocean surface and another 5,000 meters below the seabed.
Petrobras Share-Swap
The Libra estimate is based on a study by Gaffney, Cline & Associates, Lima said today at an event in Rio de Janeiro in remarks confirmed by the ANP’s press office. The consulting company was previously hired by the ANP to assess the value of 5 billion barrels of deep-water reserves in nearby fields that the government sold to Petrobras in exchange for stock.
Rio de Janeiro-based Petrobras raised about $70 billion last month in the world’s biggest share sale to help fund its $224 billion, five-year investment plan, the oil industry’s largest. Petrobras on Sept. 1 said it agreed to pay $42.5 billion in new stock for the 5 billion barrels of undeveloped reserves, including 3.1 billion from the nearby Franco field.
Under oil regulations passed this year, Petrobras will be the operator of all new concessions granted in the pre-salt area.
Spain’s Repsol YPF SA also has stakes in deep-water blocks of the Santos Basin. OGX Petroleo & Gas Participacoes SA, the Brazilian oil company controlled by billionaire Eike Batista, is exploring shallow waters of the basin and not the pre-salt area.
The Libra discovery is “positive for everybody operating down there,” Eric Conrads, who helps manage about $1 billion in emerging market funds at ING Investment Management in New York, said in a telephone interview. “That’s positive for Petrobras, that’s positive for Repsol, that’s positive for OGX.”
Libra Plans
The ANP has said that Brazil’s government plans to keep control of Libra as the South American nation tightens its grip on its reserves. Pre-Sal Petroleo SA, a new state oil company, will own at least 40 percent of Libra, Magda Chambriard, an ANP director, said Sept. 15 in an interview. That’s on top of a minimum 30 percent stake to be held by Petrobras, she said.
Petrobras has plunged 28 percent this year, while OGX has gained 27 percent and Repsol rose 5.6 percent.
To contact the reporter on this story: Peter Millard in Rio de Janeiro at pmillard1@bloomberg.net; Jessica Brice in Sao Paulo at jbrice1@bloomberg.
To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net
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