Petrobras Says It Holds Billions Of Barrels Of Offshore Oil

 
on May 22 2012 3:48 PM
A Petrobras Oil platform is seen at Guabanara bay in Rio de Janeiro
A Petrobras Oil platform is seen at Guabanara bay in Rio de Janeiro on Sept. 24, 2010. Reuters

Brazilian state-owned oil company Petrobras (SAO: BR:PETR4)  announced Tuesday it holds tens of billions of barrels of oil reserves to be developed from offshore oil fields.

Speaking to investors, Petrobras Chief Financial Officer Almir Barbassa said the company and its partners hold between 15 and 20 billion barrels of oil. Most of the oil is located in the country's Santos Basin, where some of the largest oil discoveries of the past several decades have been made, reported Dow Jones Newswires.

The Santos Basin, comprised of 20 oil fields, the majority of them operated by Petrobras, is said to hold as much as 43 billion barrels of oil. Brazil in general could have as much as 100 billion barrels of oil locked up in offshore deposits, according to the U.S. Geological Survey.

Most of the oil discoveries in the Santos Basin were made in the last decade, and within the next couple of years Petrobras the company hopes to start profitably developing its finds.

We will soon be cash-flow positive, Barbassa told Dow Jones. What big oil company wouldn't have taken part in a deal like this if it had the same opportunity?

The challenges to the country's energy goals are as vast as its potential. Actually reaching the oil, for example, is a technical challenge.

The country's oil deposits are sometimes trapped deep underground past a layer of salt as much as 6,500 feet deep, according to oil-services company Halliburton.

During the investor call, Barbassa also said the company's earnings and possibly its dividend payments could be squeezed because of the weakness of the Brazilian real, because Petrobras debt is denominated in U.S. dollars. The company has $37 billion in debt and assets abroad, Bloomberg reported.

It reduces net income at this moment, Barbassa said. It causes some changes in the payments of dividends.

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