MercoPress. South Atlantic News Agency

Petrobras discovers second offshore huge gas reservoir

Brazil's government managed oil company Petrobras announced this week the discovery of a huge second natural gas field 290 kilometeres off the coast of Rio do Janeiro and 40 kilometeres north of the Tupi field which is thought to be one of the largest discovered in the past twenty years.

Although Petrobras was cautious about details and said further work needs to be done to establish the size of the Jupiter field, it did venture that "its structure could have dimensions similar to Tupi". Last November Petrobras estimated Tupi could hold between five and eight billion barrels of light oil. The discovery was made by a consortium made up of Petrobras - which has an 80% stake in the find - and Portugal's Galp Energies (20%). Petrobras is a world leader in deep water oil production. According to Petrobras the discovery of the natural gas and condensate field in the Jupiter area in the Santos Basin, reinforces the notion there is practically no exploratory risk in pre-salt layer. "All of the pre-salt blocks achieved exploratory success, something that confirms the region's high prospectivity" said Petrobras' exploration and production director, Guilherme Estrella, during a press conference held at Petrobras' main office building. Petrobras has stakes in 13 blocks in initial exploratory phase in the pre-salt layer in the Santos basin. Estrella also highlighted the similarities between the Tupi and Jupiter dimensions. "This new field's geological structure indicates an area of 1,200 square kilo11meters, similar to Tupi's." The pioneer well, 1-BRSA-559-RJS (1-RJS-652) is nestled at a final depth of 5,252 meters and a water depth of 2,187 m. China's economy booming but inflation is main challenge China's economy expanded 11.4% in 2007, the fastest in 13 years, mainly powered by exports and investment, even as growth slowed down slightly in the fourth quarter. However inflation remains the main challenge, according to data released by the government on Thursday. GDP increased to 3.41 trillion US dollars last year, with China closing in on Germany as the world's third-largest economy behind the United States and Japan.2007 was the fifth consecutive year GDP expands 10% or more, said Xie Fuzhan, director of the National Bureau of Statistics (NBS), at a press conference in Beijing. However GDP growth slowed in the last quarter of 2007 to 11.2% from 11.5% in the previous three months and 11.9% in the second quarter. Xie Fuzhan said that that government macro-economic controls to cool the economy were taking effect. Beijing raised interest rates six times last year and increased the minimum reserve ratio of commercial banks in an attempt to take the steam out of the economy. Of the three power engines pulling forward China's economy, exports and fixed-asset investment continued to outgrow domestic consumption in 2007, according to the NBS figures. Exports grew 25.7% to 1.218 trillion US dollars in 2007, though growth was 1.5 percentage points lower than in the previous year, largely due to weaker US demand. Imports rose 20.8% to 955.8 billion US dollars with twelve mlnths trade surplus of 262.2 billion. Actual foreign direct investment in 2007 rose 13.6% to 74.8 billion US dollars while the trade surplus and inflow of foreign investment boosted China's foreign reserves to 1.53 trillion US dollars by end of 2007, up 43.3% from a year ago. Total retail sales of consumer goods, China's yardstick for measure domestic consumption, grew 16.8%, 3.1 percentage points higher than the rate of increase in the previous year. Fuzhan Xie said that China would take the necessary steps to counter the negative impact of a possible US economic recession. "Like others, we are paying close attention to the US economy and its impact on the world economy and China's economy. The United States and China are both important power engines for world economic growth. A slowing US economy no doubt would have a negative impact on the outlook of the global economy ... China will accordingly take relevant measures to reduce such negative impact". The policy-setting Central Economic Work Conference at the end of last year anticipated a "prudent" fiscal policy this year which was interpreted as meaning China will continue to increase government spending to sustain growth when exports are likely to slow down. Fan Caiyue, an official with the National Development and Reform Commission - the country's top economic planning agency, said China's 2008 GDP growth was estimated at 11%. Another key index announced this week was China's consumer price index (CPI), which advanced 4.8% in 2007, including an 11-year high of 6.9% in November, far above the government's 3% target for 2007. CPI in 2006 was 1.5%. Inflation in China has been fueled mainly by a spike in food prices. NBS said the price of meat, poultry and related products increased 31.7% in 2007 and the price of general foodstuffs gained 12.3%, pushing the CPI up by 4 percentage points. NBS also blamed higher oil prices for the jump in inflation. Inflation has become public enemy number one for the Beijing government, fearing that food and fuel prices could trigger social discontent, as happened back in 1989 when the student-led demonstrations at Tiananmen Square. Inflation at the time has reached 25%. The Central Economic Work Conference announced a tighte monetary policy to tighten credit and help curb inflation and excessive liquidity. This month also Beijing imposed price controls on some staples and again raised commercial banks reserve ratio by half a percentage point. "Even without any new factor to stimulate inflation, we still address the pressure from the carry-forward inflation of last year. We need a number of measures to control price rises, but it will take time for them to show their effectiveness", announced Xie Fuzhan. Government and private 2008 inflation estimates range from 4.4% to 5.5%.