Brazil's ANP President: Subsalt Oil Drilling To Start In Dec.

Brazil's oil regulator, the National Petroleum Agency, or ANP, said it will start drilling in a promising offshore oil patch in the first week of December, the Estado news agency reported Thursday.

According to ANP's president, Haroldo Lima, the aim is to help delineate areas containing 5 billion barrels of oil to be used for a capital infusion of state-run energy giant Petroleo Brasileiro SA (PBR), or Petrobras.

ANP hired Petrobras in September to drill exploration wells in the so-called subsalt oil reserves that will be ceded to Petrobras from the government as part of the capitalization plan.

"We began with evaluating a large number of areas, around 20, then we reduced them to two areas," Lima said.

He said the aim was to locate new large oil reservoirs with the potential of between 2 billion and 3 billion barrels each.

Lima said it was possible a third area would be drilled if one of the two initial areas was not successful.

"Our main idea is not to facilitate the division into units and hand over several blocks with a small amount of oil," Lima said. "Our idea is to find a lot of oil in a few areas. We need to find 5 billion barrels and this has to be in one, or at most, two blocks," he said.

Lima also said analysis indicated several potential areas but he would not initially discount the idea of drilling next to existing discoveries, such as the Tupi and Iara fields.

The cost of drilling would be between 400 million Brazilian reals ($230 million) and BRL500 million, said Lima.

Under the plan, the government plans to cede rights to explore and produce 5 billion barrels of oil in the subsalt region to Petrobras. Petrobras will pay fair market value for the oil with a share offer.

The finds were made under a thick layer of salt in the Santo Basin off the coast of Sao Paulo and Rio de Janeiro States.

The oil lies under more than 2,000 meters of water and a further 5,000 meters under sand, rock and a shifting layer of salt.

-By John Kolodziejski, Dow Jones Newswires; 55-21-2586-6086; John.Kolodziejski@dowjones.com