Brazil has cemented its status as the world's most promising source of new oil with an estimate that its barely explored Libra field could produce as much as 15 billion barrels of crude.
The ultra-deepwater oil deposit is the latest in a string of finds that have in the past three years catapulted Brazil into a position of global prominence as its reserves rapidly increase.
Although earlier estimates had suggested the Libra field contains eight billion barrels - a figure the Brazilian National Petroleum Agency said on Friday remains its "best estimate" - Libra could be the biggest find in the Americas in more than three decades.
Together with Tupi, a nearby field also in Brazil's offshore that contains five billion to eight billion barrels, Libra "represents far and away the biggest source of new oil we've found in several decades. And there appears to be plenty of promise that they will find more," said Julius Walker, senior oil analyst with the International Energy Agency.
"Which makes it a very big deal. We're talking about the single biggest source of new non-OPEC crude oil."
While observers questioned the timing of the new Libra estimate - it came just two days before a Brazilian presidential vote - there is little doubt that the massive new number raises the stakes for the throng of companies expected to compete for the new fields in an auction planned for the first half of next year. New terms drafted by the Brazilian government are expected to guarantee state-owned Petroleo Brasileiro SA - or Petrobras - at least a 30 per cent operating interest in any of the new areas. But the vast quantity of available oil is expected to draw bids totalling billions.
"It's going to attract absolutely huge interest," said Ruaraidh Montgomery, senior analyst for Latin America upstream research at Wood Mackenzie.
Interest is expected from both international super-majors that have yet to gain a strong foothold in the area, and from national oil companies "from China and India and so on," Mr. Montgomery said. "Perhaps companies who are more interested in the resource rather than the economics of it."
The Libra field is part of the Santos Basin, an incredibly prospective - and incredibly large - offshore oil repository. At 340,000 square kilometres, it is roughly the size of Germany. Assuming the most optimistic Libra figures, it may contain nearly 40 billion barrels of recoverable oil, Wood Mackenzie has calculated. But estimates cover a wide range: The petroleum agency has suggested recoverable oil in the area could approach 80 billion barrels, or roughly half the current predictions for Canada's oil sands. Petrobas has estimated it holds just under 20 billion barrels.
The Libra field is especially uncertain. Estimates of its size rely on only one well; the petroleum agency said Friday it could produce anywhere from 3.7 billion barrels to 15 billion barrels. A spokeswoman at Petrobras, which drilled the well upon which the estimates are based, declined to comment on that company's own estimates, and the top-end estimate drew skepticism from those who pointed to its release so close to an election vote.
"I don't want to say that [the petroleum agency]is deliberately misinterpreting figures in order to support the government. But the timing is perhaps questionable," said Juliette Kerr, a senior research analyst with IHS Global Insight.
Still, even the lowest estimates point to a massive find.
The crude comes from the "pre-salt" zone, buried five to seven kilometres below the sea surface, beneath a layer of pasty salt nearly 2,000 metres thick. Both the depth and the salt, which makes drilling hard, pose technical issues that make extraction difficult. In fact, the first well into the Libra was abandoned when its casing collapsed in the salt, raising the stakes for companies drilling in a deep-water environment whose risks were brought to the global fore by BP plc's accident in the Gulf of Mexico.
Several dozen wells, however, have successfully punctured the pre-salt, which has only a smattering of foreign leaseholders, including Repsol YPF S.A., BG Group plc and Galp Energia SGPS SA. Current production sits at about 15,000 barrels a day, but Wood Mackenzie estimates that within a decade, Brazil could churn out 1.5 million barrels per day from the pre-salt - a more than 50-per-cent increase from current output.
"Everything that's come out of the pre-salt so far has been very good," Mr. Montgomery said.