Big news on the wires yesterday as Brazil’s Petrobras announced that it has discovered a new oil field, deep under the Atlantic Ocean, which could make it one of the world’s largest oil producers. Shares of Petrobras skyrocketed as some journalists and market watchers got carried away by the Brazialian government spin.
Let’s do a little reality check:
- The Tupi oil field is located offshore and in deep waters which will make it very expensive to extract the oil;
- It will take at least five more years before first production can start;
- The field could contain between 5 and 8 billion barrels of recoverable light oil and natural gas. Although this is indeed one of the biggest finds in recent years, in reality 8 billion barrels of oil represents about 100 days of world oil consumption (the world now needs 85 million barrels of oil per day);
Good news for Brail certainly (less imports needed) but how much of it (if ever commercially extractable) will be used for domestic use and how much for exports? And what will be the implications of this find on the biofuels production of the country?
Good news for world oil security? Think again. According to the IEA’s World Energy Outlook, 37.5 million barrels per day new capacity is needed to deal with growing demand and increasing declines of existing fields between 2006 and 2015. Under the most optimistic scenario, the Tupi field (if commercially exploitable) would add 500.000 barrels per day.
- Petrobras: press release 8 November 2007
- Simmons & Co International: The World’s Giant Oilfields.
- International Herald Tribune: Offshore oil discovery could make Brazil major petroleum exporter