November 9, 2011 / 11:30 PM / 8 years ago

UPDATE 1-Petrobras upholds size estimates of Franco well

* Franco area believed to hold most subsalt oil

* Subsalt region is expected to have 50 bln boe

* Well is still in drilling phase, Petrobras says

Nov 9 (Reuters) - Brazilian state-controlled oil company Petrobras said on Wednesday that recent drilling in a major offshore well confirmed prior estimates about its size, giving a major boost to the nation’s bid to become a major oil producer.

The Franco well, which is located inside an area with massive oil reserves known as the subsalt, is thought to have about 3.05 billion barrels of oil equivalent, the Rio de Janeiro-based company said in a regulatory filing.

The Franco NW well, which is known as 3-BRSA-944A-RJS (3-RJS-688A), is 1,860 meters below the sea floor, and about 200 kilometers from the city of Rio de Janeiro.

The discovery “was confirmed through good quality oil samples obtained from cable tests,” the filing said. After the drilling phase is completed, Petrobras plans to continue with the gathering of seismic data, the filing added.

Brazil’s subsalt reserves are estimated to contain 50 billion or more barrels of oil and could catapult the Latin American country to the ranks of the world’s top oil producers. Franco is considered the largest recipient of subsalt oil in an area that the government last year leased to Petrobras in exchange for cash.

By 2020, Brazil is expected to produce more than 7 million barrels of oil and natural gas a day, an amount that could make it one of the world’s three largest producers, based on current output and estimates from Petrobras and other oil companies operating in Brazil.

Preferred shares of Petrobras tumbled 4.2 percent to 21.46 reais on Wednesday. The stock is down 15 percent this year.

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