UPDATE 1-Petrobras CEO says oil price no hurdle to subsalt
Fri Dec 5, 2008 11:22am EST Email | Print | Share| Reprints | Single Page | Recommend (0) [-] Text [+] Market News
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SAO PAULO, Dec 5 (Reuters) - Petrobras (PBR.N: Quote, Profile, Research, Stock Buzz)(PETR4.SA: Quote, Profile, Research, Stock Buzz) Chief Executive Jose Sergio Gabrielli said on Friday the price of oil was not an obstacle to developing massive oil deposits that are difficult to access deep beneath the ocean floor.
The finds of potentially more than 50 billion barrels of light oil below a thick layer of salt could turn Brazil into one of the world's top oil producers.
The price of oil fell below $42 per barrel on Friday to its lowest level since January 2005, after a U.S. government report showed more than half a million Americans lost their jobs last month.
Analysts said developing the subsalt fields was viable only at a price of at least $50 per barrel.
The price of oil wasn't the biggest concern, Gabrielli told a chemical industry conference in Sao Paulo.
"The biggest problem is developing a new model of production to develop these gigantic reserves," he said in Sao Paulo.
"We need to optimize the production system for the subsalt (reserves)," Gabrielli said.
A host of technological challenges to extracting the oil from as deep as 7 kilometers (4.5 miles) below sea level could further increase costs, according to analysts.
But authorities said they expect production costs to fall with the global economic downturn as equipment and services become cheaper.
Petrobras holds 65 percent of the recoverable subsalt reserves of around 15 billion barrels in Brazil.
Other companies with interests in subsalt fields are Britain's BG Group Plc (BG.L: Quote, Profile, Research, Stock Buzz), Galp of Portugal GALP4.SA, Exxon Mobil Corp (XOM.N: Quote, Profile, Research, Stock Buzz), and Spain's Repsol-YPF (REP.MC: Quote, Profile, Research, Stock Buzz). (Reporting by Marcelo Teixeira; writing by Raymond Colitt; editing by John Picinich/Jeffrey Benkoe
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