Brazil oil agency chief says offshore oil field could be world's third-largest

SAO PAULO, Brazil -- A deep-water exploration area could contain as much as 33 billion barrels of oil, an amount that would nearly triple Brazil's reserves and make the offshore bloc the world's third-largest known oil reserve, a top oil official said Monday.

National Petroleum Agency President Haroldo Lima cautioned that his information on the field off the coast of Rio de Janeiro is unofficial and needs to be confirmed -- but his comments sent shares of the state-run Petrobras oil company soaring in New York and Sao Paulo.

Petrobras and Brazilian Mines and Energy Minister Edison Lobao declined comment on what would be the planet's largest oil find in decades as the company's shares moved wildly in positive territory after Lima made the comments.

Lima told reporters that Petrobras "may have discovered a huge petroleum field that could contain reserves large as 33 billion barrels," amounting to the world's third-largest reserve, according to his spokesman, Luiz Fernando Manso.

Manso did not provide any details about where Lima got his information, except to say it came from "nonofficial, non-confirmed sources."

Lima's agency regulates Brazil's oil industry, and his comments appeared to represent confirmation of what experts have long suspected: That extremely deep exploration areas hundreds of miles (kilometers) off the nation's coast may hold potentially huge reserves.

Brazil's current proven oil reserves are 11.8 billion barrels, according to the U.S. Energy Department. The U.S. has 21.8 billion barrels in proven reserves.

"You're talking about a reserve the size of total U.S. reserves," said Tim Evans, an analyst with Citigroup Inc. in New York. "It's a big, big number."

If proven, the oil in the exploration area called both Carioca and Sugarloaf Mountain by analysts would also be five times larger than the Tupi oil field, whose estimated reserves of 8 billion barrels were announced by Petroleo Brasileiro SA in November. Petrobras also announced a blockbuster find of natural gas in February in an Atlantic Ocean field nicknamed Jupiter.

Industry experts say the Tupi and Jupiter fields alone could turn Brazil into a major oil and gas exporter and lead to it joining OPEC.

Petrobras is renowned for its deep-water drilling ability, and is widely regarded as one of the best state-run oil companies in the world.

Brazil became self-sufficient in oil production in 2006 but must import light crude oil for the refined products it needs. The country produces -- and exports -- mostly heavy crude oil, which has to be mixed with the light oil in refineries.

While the potential Brazil find could add significant supplies to a global oil market many see as tight, it would likely take the better part of a decade before any of oil finds its way to market. The site will need to be studied further, and drilling platforms must be designed, built and transported before it can start producing oil.

However, it does cast new doubt on peak oil theory, which postulates that world oil demand will soon outpace supply.

It is impossible to say whether or not more 33-billion-barrel oil fields exist under the sea, Evans said.

"Nobody really has data on what's out there in the middle of the ocean," Evans said.

By late afternoon, the company's American depository shares were up 7.5 percent late Monday afternoon in New York, or US$8.29 (Ȣ‚ˆ¬5.22) to US$121.14 (Ȣ‚ˆ¬76.34).

Petrobras shares in Brazil went on a wild ride in Sao Paulo, fluctuating between 2 percent and 7 percent higher and settling up 5.2 percent in late afternoon trading while the benchmark Ibovespa index was down nearly 1 percent.

Oil prices were unaffected by the news. Light, sweet crude for May delivery rose $1.62 (Ȣ‚ˆ¬1.02) to settle at a record $111.76 (Ȣ‚ˆ¬70.43)