MercoPress. South Atlantic News Agency

Brazil confident since pre-salt oil is profitable 'even at 60 dollars a barrel'

“I don't know of any pre-salt project that cannot resist the 70 dollar or even the 60 dollar mark” said Ms Chambriard

The head of Brazil's National Petroleum Agency, Magda Chambriard said that the country's oil production projects remain 'robust' even as international prices for crude continue to tumble. She underlined that the pre-salt projects of Brazil along ist coast resist prices as low as 60 dollars a barrel.

“I don't know of any pre-salt project that cannot resist the 70 dollar or even the 60 dollar mark” said Ms Chambriard during an innovation and research ceremony.

“We still have very robust projects. When we're talking of projects with investments of 5 billion dollars, we are also referring to projects with large scale profits. We have big lungs”, insisted the official.

Petrobras, Brazil's giant oil and gas corporation is sole operator for the pre-salt reserves and enjos a guaranteed minimum participation of 30% in each exploration bloc in partnership with foreign firms including Shell and Total and two Chinese companies.

The pre-salt has gigantic areas 'capable of attracting everybody in the world', added Ms Chambriard.

However mired in a multibillion dollar corruption scandal, Petrobras faces the prospect of a funding crunch for its projects to develop huge deepwater oil deposits that represent the country's energy future.

With oil prices diving to their lowest level in five years and Brazil's currency also sliding, analysts say Petrobras is likely to encounter difficulty maintaining its current pace of investments in the “pre-salt” deposits in the Atlantic.

Discovered in 2006, the deposits are estimated to hold 100 billion barrels of recoverable oil, more than double Brazil's known oil reserves. If successfully exploited, they could double Petrobras' daily production to five million barrels by 2020.

But the huge deposits are trapped below salt formations under the ocean floor 230 kilometers off the Brazilian coast, and extracting oil from them presents numerous technological challenges.

Encompassing a 149,000 square kilometers area, they are not just far from shore but also below several kilometers of water, several layers of rock and another two kilometers of shifting salt.

Petrobras is committed to investing 82 billion overall in pre-salt between now and 2018, amid a 237 billion five-year investment plan comprising one of the world's biggest corporate spending programs.

But while launching an onshore well costs around 5 million even without complications, in the pre-salt zone well out to sea the bill soars to 120 million. To date, only one field, Lula, has reached the production phase.

Even if oil prices drop still further, foreign firms will likely keep wells in production as they come on stream in the knowledge costs will fall as production rises. Lula production, for example, costs just 9 dollars per barrel, according to ANP.

Pre-salt production is currently running at more than 500,000 barrels per day, equivalent to 20% of the firm's overall production.