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Petrobras says subsalt oil viable at $45/barrel, $52/bbl with gas

RIO DE JANEIRO, Jan 6 – Brazil’s state-run oil company Petrobras said on Tuesday that its offshore subsalt oil fields, its main source of new output, are profitable with oil at about $45 a barrel, or about 12 percent below today’s quote for benchmark Brent crude.

That break-even number for projects rises to $50 to $52 a barrel if the cost of piping natural gas from its deepwater fields to shore is included, Petroleo Brasileiro SA, as Petrobras is formally known, said in a statement.

“The break even (the minimum price for which production is economically viable) planned at the moment that subsalt projects are approved for production is about $45 a barrel, and without considering the cost of infrastructure to take off natural gas,” Petrobras said in a statement.

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Rio de Janeiro-based Petrobras, already under pressure because of a corruption scandal that has cut it off from debt markets and forced it and its contractors to halt activity at work sites throughout Brazil, has also seen revenue hurt by a more than 50 percent decline in the price of benchmark Brent crude oil since June.

Brent crude fell 3.9 percent to $51.06 a barrel on Tuesday, its lowest level in more than 5 1/2 years and its second-biggest one-day drop since 2011.

Brazil’s so-called subsalt fields are in high-cost, deep-water fields that require expensive technology and infrastructure to produce. Subsalt refers to oil trapped deep below the ocean and seabed by a layer of mineral salts.

Petrobras also said its break-even cost estimates are also based on average flows per well of 15,000 to 25,000 barrels per day (bpd) and that the current daily average for subsalt wells is 20,000 bpd.

Brazil, led by Petrobras, produced 602,300 barrels a day of oil and 20,9 million cubic meters of natural gas a day from subsalt fields northeast and south of Rio de Janeiro in November, according to Brazil’s oil regulator, the ANP.

(Reporting by Jeb Blount; Editing by Grant McCool)

This article was from Reuters and was legally licensed through the NewsCred publisher network.