Media sites have been going crazy about Petroleo Brasileiro (Petrobras)’s recent discovery of 33 Billion barrels of oil equivalent at its Carioca field off the coast of Sao Paulo. If true, that would make it the biggest oil find in the last thirty years, the third largest ever and worth, conservatively, $3.3 trillion.
But where did that number come from, and why didn’t the price of oil fall after such a large potential increase in supply?
The 33 billion comes from a regulator’s estimates published in the February edition of World Oil magazine. It reached prominence this week when Harold Lima, head of the country’s oil and fuel market regulator brought it up at an industry press event.
Despite a 7% boost in its stocks, Petrobras was quick to distance itself from the claim. Guilherme Estrella, chief of exploration and production says the claim has“no technical basis,” in a Bloomberg article. The article later mentions a Citigroup report which puts the current estimate of Petrobras’ discovery at 10 billion barrels, though further exploration could increase this number.
Reuters and other sources repor that Brazil’s stock market regulator has already criticised its National Petroleum Agency for propogating a number not yet confirmed. It may seek to investigae the issue for fraud, though this seems less like a conspiracy than an over optimistic prediction by Limas taken too far.
Petrobras plans to release further information after another three months of exploration and research, but the firm must do all it can to prevent speculative buying and selling of its shares, since a large sell off due to less-than-expected finds could badly rock Brazil’s oil heavy stock exchange.
Still, a find of just 10 billion barrels, worth $1.1 trillion, is a remarkable discovery in itself, and Brazil may soon become a heavy hitter in the oil markets.
