Cablegate: (Corrected) Petrobras Announces 3-4 Billion Barrels In

VZCZCXRO0924
RR RUEHRG
DE RUEHRI #0245 2551656
ZNR UUUUU ZZH
R 111656Z SEP 08
FM AMCONSUL RIO DE JANEIRO
TO RUEHC/SECSTATE WASHDC 4618
INFO RUEHBR/AMEMBASSY BRASILIA 0954
RUEHSO/AMCONSUL SAO PAULO 5181
RUEHRG/AMCONSUL RECIFE 3452
RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUCPDOC/USDOC WASHDC
RHEBAAA/USDOE WASHDC

UNCLAS RIO DE JANEIRO 000245

SIPDIS

STATE FOR WHA/BSC, WHA/EPSC, EB/ESC
USDOC FOR 4332/ITA/MAC/WH/OLAC/JANDERSEN/ADRISCOLL/MWAR D
USDOE FOR CAROLYN GAY AND RHEA DAVIS

E.O. 12958: N/A
TAGS: ENRG EPET EINV BR
SUBJECT: (Corrected) Petrobras Announces 3-4 Billion Barrels in
Iara Field, Same Exploration Block as Tupi

REFS: A) 07 Sao Paulo 899, B) Rio de Janeiro 91, C) Rio de Janeiro
35, D) Rio de Janeiro 138, E) Rio de Janeiro 135, F) Rio de Janeiro
159, G) Brasilia 910, H) Brasilia 1122, I) Rio de Janeiro 237, J)
Rio de Janeiro 235

1. Petrobras has announced that its Santos Basin pre-salt "Iara"
field holds an estimated recoverable volume of 3-4 billion barrels
of light oil and natural gas. Relevant test well data reveals that
recoverable volume ranges are significantly better than initially
forecast. The Iara field is located about 143 miles off the coast
of Rio de Janeiro at a water depth of 7,316 feet. It is in the same
BM-S-11 exploration block as the "Tupi" field, but in a non-adjacent
area to the north.

2. The Tupi discovery, announced in November 2007, has an estimated
recoverable volume of 5-8 billion barrels of light oil and natural
gas. It is the largest oil find in the Americas since 1976. If
confirmed, Iara and Tupi could almost double Brazil's 12.6 billion
barrels of proven oil reserves. Petrobras operates the BM-S-11
block consortium with a 65 percent interest. Partners are BG Group
(UK) with 25 percent interest and Galp Energia (Portugal) with 10
percent interest.

3. Energy analysts believe that Iara announcement is significant
because the volume is impressive given the relatively small area of
the field compared to Tupi. The Iara portion of the block is less
than a quarter of the size of Tupi. Also significant is the timing
of the announcement -- nobody was expecting Petrobras to announce
new volume estimates before mid-2009.

4. Many experts and government officials commonly talk about the
potential of the Santos Basin's pre-salt reserve as 30-70 billion
barrels. However, Tupi and Iara are the only official estimates for
Santos Basin pre-salt oil reserves so far which are based on
drilling results and test data. Current exploration activities are
limited to companies who have already executed concession contracts
in the area since the Government of Brazil has suspended further
licensing of pre-salt oil rights while it considers regulatory
changes aimed at capturing more revenue.

MARTINEZ

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