Friday, 2 July 2010

OXG discovers crude oil off Brazil's coastline

OGX has announced that it has discovered signs of crude oil off Brazil's coastline, and that it intends to start producing in 2011 at a rate of about 20,000 b/d.

The discovery was made in the BM-S-29 block in shallow waters of the Santos Basin, about 130km off the coast of Sao Paulo. Brazilian billionaire, Eike Batista,who owns 62 per cent of OGX, has said that he will put in $4 billion into the operation, and expects to see first output toward the end of 2011.

Talking about OGX's plans, chief executive, Paulo Mendonca, said that the company is actively "studying the whole of Brazil for new acquisitions," and that even though OGX is "a long way off pre-salt," it awaits the right opportunity to "re-enter the pre-salt" sector.

The new discovery promises to be a success, with projected output expected to grow to 730,000 b/d in 2015, and subsequently to 1.4 million. According to Batista large international oil companies, including several from China, have approached OGX about the possibility of partnering up for oil drilling.

"The Chinese are interested in investing in the offshore subsalt oil area in Brazil. They've already taken a look at it," Batista told reporters at an event in Rio de Janeiro.

Source: Bloomberg

For more news and expert analysis about Brazil, please see Brazil Focus.

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