The discovery of enormous oil supplies in the Santos basin offshore Brazil that lie deep under a salt layer is the most optimistic development for future oil supplies perhaps in decades, eclipsing the GOM Thunderhorse or Jack discoveries or the African offshore discoveries.  But since the price of oil has slipped below $70 these Brazilian prospects, and the outlook for Petrobras (PBR), the state-controlled oil company slated to benefit from them, is much more questionable as discussed in the essay below published at Seeking Alpha.   Brazil has published …

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By Jeb Blount and Carla Simoes

May 15 (Bloomberg) — Brazil won’t auction new oil properties until at least 2009 because there is a lack of equipment necessary to expand exploration, Mines and Energy Minister Edison Lobao said.

Oil companies need to start work on the leases they already have before Brazil can contemplate its planned Round 10 auction or revive its stalled Round 8 auction, Lobao said today in an interview in Brasilia. State-controlled Petroleo Brasileiro SA, or Petrobras, has seen timetables broken by platform shortages.

To try and reduce …

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About the only factor that has disturbed me about PetroBras, which I own, is the potential conflict between the interests of shareholders and those of state of Brazil.  Here is news that Pres. Lula is urging management to side with the country in just such a conflict.   The issue is how PBR will obtain the massive number of new deep sea rigs it will need to expoit its new offshore discoveries.  I must say, this is a nice problem for a company to have. Here is the full article …

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By Yuji Okada and Shigeru Sato April 7 (Bloomberg) — Petroleo Brasileiro SA, Brazil’s state-controlled oil company, will invest $15 billion on overseas oil projects, aiming to double its crude oil production to capture growing demand in Asia and South America. The Rio de Janeiro-based company plans to expand its oil output to 4.15 million barrels a day by 2015 from the current 2 million barrels, Jose …

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Oil and Gas Journal (2/25/08) reports that Frank Chapman, CEO of BG Group, which holds a 25% interest in the Tupi field has estimated that hydrocarbons in place could be 12 - 30 billion boe or more, up from its own previous estimate of 1.7 - 10 billion.   Petrobras (PBR), which did not comment on BG’s estimate, reported in late 2007 the discovery of as much as 8 billion bbls of light crude in the Tupi field off Rio de Janeiro. 

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SAO PAULO, Brazil: Brazil’s state oil company said Monday it has discovered a huge natural gas reserve off the coast of Rio de Janeiro that could be as big as the recently discovered Tupi oil field.

Petroleo Brasileiro SA said in a news release posted on its Web site that the potential reserves in the new field were located about 5,100 meters (16,800 feet) below the surface of the Atlantic Ocean.

Petrobras did not provide any figures on the size of the reserve, but said “its structure could have dimensions that …

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Below is a reasonable statement of the bull case for PetroBras, the giant Brazilian oil company.  Stated simply - the off-shore oil elephant sized discoveries that PBR made last year, combined with its record of excellent management, mean that the company may well become the largest and most successful oil company in the world in a decade or two. 

The other side of the argument includes the fact that the stock is not cheap on current fundamentals.   More importantly, though, is the fact that the hydrocarbons that may transform the company …

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The Oil & Gas Journal (12/17/07) reported that PBR intends to develop the giant Tupi field as follows:

1.  100,000 b/d early production system in place by 2011.

2.  5 - 8 billion barrels recoverable oil estimated.

3. It will take 2 years to create a Tupi development plan. The company is in the process of securing and building rigs now.  Tupi development costs are not included in PBR’s $112.4 B capital budget for 2008 - 2012.

4. Brazil aspired to produce 4.5 mb/d by 2015 with Tupi providing 2.2  mb/d.

5. Brazilian consumption is …

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As reported by The Oil and Gas Journal (12/3/07) a Brazil court stopped payment by Petrobras for two offshore oil platforms in June, 2007, because the prices being charged for the equipment were far in excess of the proper amount.  In July, police arrested three top PBR officials along with directors of three shipyards relating to bid rigging for the repair of offshore platforms.  The company reported in November that it was having problems increasing production in existing offshore fields and production fell below its stated goals for the January …

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