[NYTr] Brazil: "Tupi" Field Opens Door to Big Oil
 
Date: Sat, 24 Nov 2007 00:36:58 -0600 (CST)

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Prensa Latina, Havana
http://www.plenglish.com

Brazil: "Tupi" Field Opens Door to Big Oil

by Carlos A. SC!nchez

The discovery of a huge hydrocarbon deposit along the coast of Brazil
feels like a gust of fresh air in a turbulent world upset by the
endless hike in oil prices, the campaign of the United States against
Iraq and Iran, and forecasts of increasing depletion of world fuel
supplies.

It is true the "Tupi" field is about 4.3 miles deep under the seabed
and because of that it is estimated to start producing only in about
five years. The fact is that this find brings a renewal of hope that
the era of big oil discoveries of good quality has not ended and
although at a higher cost, still findings of big-scale economically
exploitable oil can be made.

The first estimates indicate this oilfield contains between 5 to 8
billion barrels of oil and drilling will require investments for about
100 billion, according to the first press releases.

The information published in the media carry estimates that vary
constantly. However, all agree that it is a huge oil layer that jeans
many positive consequences for Brazil.

The state oil company PetrobrC!s confirmed on November 8 a deposit
between 5 and 8 billion barrels of oil and natural gas, in a new
geological horizon deep in the Atlantic.

The deposit by itself will increase proven reserves in all Brazil by 50
percent. The company also said that oilfield -almost 500 miles long and
124 miles wide- would hold as much probable reserves as to place this
country among the exclusive club of the world s 10 most important
producers and exporters.

The Tupi oilfield was found in block BM-S-11 of about 38.6 square miles
operated by PetrobrC!s (65 percent) together with Portuguese Galp
Energia (10 percent) and British BG Group (25 percent).

This consortium obtained the rights in the year 2000, during a bid
organizad by the National Petroleum Agency (ANP) by paying a bonus of
15 million reales (about 8.6 million dollars).

The government withdrew 41 blocks located in the new geological horizon
from a new auction scheduled for the end of November, by invoking the
need to preserve the national interest.

In the mid-term, the country pretends to double its current production
of 2.0 million barrels per day (bpd) of crude and gas.

Tupi oil is light, of high commercial value, but it is located in a
horizon never reached before, beyond a salt bed a little over one mile
tic which separates it from the country s traditional basins.

Exploration and Production director of PetrobrC!s, Guilherme Estrella
affirmed there are "no objective technological barriers" for the
company in Tupi, but only between 2010 and 2011 the real potential of
the oilfield will be proven with a structure that should extract 100
thousand barrels per day and would cost about 4.5 billion dollars.

Geologist Giuseppe Baccocoli, oil consultant of the Federal University
of Rio de Janeiro, told a European news agency at the beginning of
November he refuted the extremes of comparing Brazil to oil powers like
Venezuela or the Arab countries. "But there is no doubt the discovery
will have world ripples," he said.

Baccocoli estimated the total production cost per barrel after summing
up exploration and financial costs in Tupi should not be less than 30
dollars per barrel in the first stage.

President Luiz Inacio Lula da Silva has said his country will enter the
Organization of Petroleum Exporting Countries (OPEC) and that once
inside the grouping he will battle for a reduction of crude prices,
currently near the 100 dollars per barrel, while in 2003 the prices
fluctuated between 25 and 30 dollars.

The price of crude set a record of 90.46 dollars in 1980, a few months
after the Iran revolution and the beginning of the Iraq-Iran war, two
of the largest oil producers of OPEC.

During the following 23 years, prices again fluctuated around 20
dollars per barrel until the invasion and occupation of Iraq, the
increasing war threats of the United States against Iran, that is urged
to abandon its nuclear development program.

Also, the constant fall of US gasoline reserves and other oil
by-products by 9% in September compared to its June level, the deficit
in refining capacity in the United States and other countries and any
other oil-related incident, is like flaring up the fire of intense
speculation in oil markets.

Speculative fever rises to an extent that prevents from knowing the
truth if it is necessary to increase crude supplies and in what amount,
in order to achieve price reduction.

OPEC sustains the world market is sufficiently supplied with crude and
resists a substantial increase in production. More than 20 developed
nations members of the International Energy Agency demand a big
increase from OPEC, although they don t say by how much.

Here is another error more frequent than is believed, about the
so-called market magic. Speculation alters prices considerably instead
of bringing about a balance between supply and demand.

In the face of such a situation, few news and only like those of the
magnitude of the Tupi discovery can bring a break from hiking prices,
at least in the mid-term.

ef csf

PL-28

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