Petroleo Brasileiro S.A. - Petrobras (PBR)

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Petrobras, Repsol, BG Find More Oil off Brazil Coast (Update2)
Joao Lima and Peter Millard

March 10 (Bloomberg) -- Petroleo Brasileiro SA, Repsol YPF SA and BG Group Plc found more evidence of oil in the same offshore Brazilian block where the companies’ Guara field holds as much as 2 billion barrels of crude.

The latest discovery was made at well 3-BRSA-788-SPS in the BM-S-9 block at a water depth of 2,118.4 meters (6,950 feet), Brazil’s National Petroleum Agency said on its Web site. The block is in the Santos Basin, off Sao Paulo state’s coast.

Petrobras, as Brazil’s state-controlled oil producer is known, operates the block, which also holds the Guara and Carioca discoveries. The Rio de Janeiro-based company, which holds 45 percent of the concession, plans to start initial output of 50,000 barrels a day at Guara in 2012.

“It’s good news,” Andres Kikuchi, an analyst at Link Corretora in Sao Paulo, said today in a telephone interview. “We need to wait a little bit more to understand what the volumes will be at those discoveries.”

Petrobras rose to a two-month high in Sao Paulo trading. The stock climbed 1.4 percent to 37.01 reais at 1:25 p.m., after earlier touching 37.16 reais, the highest since Jan. 11.

Reading, England-based BG holds 30 percent of the BM-S-9 concession. Repsol, Spain’s biggest oil company, owns 25 percent.

Tupi Discovery

Petrobras in November 2007 discovered the Tupi field, located in a nearby block in the Santos Basin. Tupi may have as many as 8 billion barrels of oil, making it the largest find in the Americas since Mexico’s Cantarell in 1976.

Petrobras said yesterday that it raised its 2010 investment target to 79.5 billion reais ($45 billion), with 35.7 billion reais for exploration and production. Petrobras didn’t provide its previous figures.

The Brazilian oil producer lifted its spending target to include rising costs for steel and oil services, Lucas Brendler, who helps oversee 7 billion reais at Banco Geracao Futuro de Investimentos, said yesterday in a telephone interview.

The pre-salt region runs 800 kilometers along Brazil’s coast from Espirito Santo to Santa Catarina states. It holds deposits beneath a layer of salt resting as much as 3,000 meters beneath the ocean surface and another 3,000 to 5,000 meters below the seabed.

Petrobras’s pre-salt production will reach 100,000 barrels a day this year as the company increases output at a Tupi pilot project, Chief Executive Officer Jose Sergio Gabrielli said yesterday in Houston.