Brazil Oil Update

China Showing Interest in Brazil’s Oil

Chinese energy companies will likely participate in bidding for Brazil’s offshore subsalt oil reserves when auctions begin and are already seeking to buy stakes in existing oil projects.

Chinese President Hu Jintao plans to visit Brazil next week to strengthen ties with Brazil as it taps tens of billions of barrels in the offshore subsalt province that has become a new frontier for petroleum exploration.

Auctions for the subsalt blocks have been yet been scheduled because Congress is still discussing new rules for companies investing projects there, part of an attempt by President Luiz Inacio Lula da Silva to boost state control over those areas.

Chinese companies are also interested in investing in refineries and biofuels projects, possibly allowing them to import finished motor gasoline that is already blended with ethanol.

Chinese companies have been insistent on being majority shareholders in new joint ventures, which would prevent them taking part in projects with state oil company Petrobras that are already in development.

Brazil’s 11th bidding round for oil blocks, which includes onshore and shallow water projects but not subsalt blocks, will likely not take place until 2011.

Petrobras Finds Light Oil in New Tupi Well

Brazil’s oil giant Petrobras said on Wednesday it found light oil in a new well that confirmed its estimate of 5 billion to 8 billion barrels in the Tupi offshore field.

The oil field is part of the country’s massive offshore subsalt area, which Brazil hopes will turn it into a major player in energy markets.

The new well, known as Tupi OW, is located at a depth of 2,131 meters (7,000 feet) and is 270 km (167 miles) from the coast of Rio de Janeiro.

Petrobras holds a 65 percent stake in Tupi, Britain’s BG Group has a 25 percent stake and Portugal’s Galp has10 percent.

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