MercoPress. South Atlantic News Agency

US financial support for Brazil to develop massive offshore pre-salt oil deposits

China had previously loaned Petrobras a similar sum

United States is prepared to provide up to 10 billion US dollars in loans to finance the development of massive hydrocarbon reserves off Brazil’s coast, revealed Brazil’s Planning Minister Paulo Bernardo da Silva.

President Barack Obama’s national security adviser, General James Jones, discussed the matter with officials this week during a visit to Brazil. He said the US Export-Import Bank already has signed a letter of intent in that regard with Brazilian state oil company Petrobras.

The loan is equal in value to a similar credit line agreed to with the China Development Bank, also for exploiting Brazil’s “pre-salt” area, so-named because the estimated 80 billion barrels of high-quality crude in that new oil frontier lie far beneath the ocean floor under layers of rock and an unstable salt formation.

Under the agreement with the Chinese state bank, finalized during Brazilian President Lula da Silva’s visit to Beijing in May, Brazil can repay the loan facility with oil as opposed to cash.

According to the government’s projections, the pre-salt reserves – located at a depth of up to seven kilometres below the ocean surface in an 800-kilometer by 200-kilometer area – could eventually lead to a nearly six-fold increase in Brazil’s current proven reserves of 14 billion barrels and transform that nation into one of the world’s 10 largest oil producers and a major crude exporter.

Petrobras plans to invest close to 29 billion USD through 2013 to develop the pre-salt deposits in which the company already holds concession rights. Petrobras is projecting that some 1.3 million barrels per day can be extracted by 2013 from the pre-salt fields and 1.8 million bpd by 2020.

The Tupi field which is believed to contain between 5 billion and 8 billion barrels of oil and was the first to be exploited in the pre-salt region, is considered to be the largest hydrocarbon discovery in the Americas in the past 30 years. Other large oil and natural gas fields were later found nearby, also under a thick bed of salt.

But Brazil has been forced to seek external financing because the fields pose an enormous technical and financial challenge due to the depth and thickness of the salt and the drastic changes in temperature as the oil is brought to the surface.

Acknowledging that Petrobras alone is not capable of developing the massive pre-salt reserves, Brazil announced in May that it will invite international oil companies to bid for concessions in that region beginning next year.

The country had previously halted the sale of concessions after the massive finds were made. Petrobras, an integrated energy company and the global leader in deepwater oil exploration and production, operates in 27 countries in the Americas, Africa, Asia and Europe.

Shares of Petrobras, Brazil’s largest corporation, trade on the Sao Paulo, New York, Madrid and Buenos Aires stock exchanges, but the Brazilian government retains control through a golden share.