Watch CBSN Live

Brazil Oil Find May Be World's 3rd Largest

A deep-water exploration area off Brazil's coast could contain as much as 33 billion barrels of oil, the head of Brazil's National Petroleum Agency said Monday. That would make it the world's third-largest known oil reserve.

Haroldo Lima cautioned that his information on the field off the coast of Rio de Janeiro is unofficial and needs to be confirmed.

The state-run Petrobras oil company declined comment on what would be the planet's largest oil find in decades, and its shares moved wildly in positive territory after Lima made the comments.

By early afternoon, the company's American depository shares were up 8.5 percent in New York, or $9.54, to $122.39. Petrobras shares in Brazil went on a wild rise, fluctuating between 2 percent and 7 percent higher and settling and up nearly 5 percent in late afternoon trading.

Lima told reporters that Petrobras "may have discovered a huge petroleum field that could contain reserves large as 33 billion barrels," amounting to the world's third-largest reserve, according to his spokesman, Luiz Fernando Manso.

Manso did not provide any details about where Lima got his information, except to say it came from "non-official, non-confirmed sources."

Lima's agency regulates Brazil's oil industry, and his comments appeared to represent confirmation of what experts have long suspected: That extremely deep exploration areas hundreds of miles (kilometers) off the nation's coast may hold potentially huge reserves.

Brazil's current proven oil reserves are 11.8 billion barrels, according to the U.S. Energy Department. The U.S. has 21.8 billion barrels in proven reserves.

"You're talking about a reserve the size of total U.S. reserves," said Tim Evans, an analyst with Citigroup Inc. in New York. "It's a big, big number."

If proven, the oil in the Carioca exploration area would also be five times larger than the Tupi oil field, whose estimated reserves of 8 billion barrels were announced by Petroleo Brasileiro SA in November. Petrobras also announced a blockbuster find of natural gas in February in an Atlantic Ocean field nicknamed Jupiter.

Industry experts say the Tupi and Jupiter fields alone could turn Brazil into a major oil and gas exporter and lead to it joining OPEC.

Petrobras is renowned for its deep-water drilling ability, and is widely regarded as one of the best state-run oil companies in the world.

Brazil became self-sufficient in oil production in 2006 but must import light crude oil for the refined products it needs. The country produces - and exports - mostly heavy crude oil, which has to be mixed with the light oil in refineries.

While the potential Brazil find could add significant supplies to a global oil market many see as tight, it would likely take the better part of a decade before any of oil finds its way to market. The site will need to be studied further, and drilling platforms must be designed, built and transported before it can start producing oil.

However, it does cast new doubt on peak oil theory, which postulates that world oil demand will soon outpace supply.

It is impossible to say whether or not more 33-billion-barrel oil fields exist under the sea, Evans said.

"Nobody really has data on what's out there in the middle of the ocean," Evans said.

Oil prices were unaffected by the news. Light, sweet crude for May delivery rose $1.07 to $111.21 a barrel in afternoon trading on the New York Mercantile Exchange, about where prices were trading before the Petrobras announcement.

View CBS News In