Brazil's state-controlled oil company, Petroleo Brasileiro SA, (Petrobras) said it has found an estimated three to four billion barrels of recoverable light crude oil in an offshore field in the Santos Basin close to the earlier Tupi find.

The discovery was made from the Iara well in the BM-S-11 block off the coast of Rio de Janeiro in which Petrobras owns 65 per cent of the field along with the UK's BG Group of Britain owns 25 per cent, and Galp Energia of Lisbon owns 10 per cent. Petrobas is the gas field operator.

Last year Brazil attracted global attention when it announced the discovery of the second-biggest oil find in 20 years in the Tupi basin that measures 800km by 200 km - off Brazil's southern coast that analysts say may contain a massive 5 billion to 8 billion barrels of untapped light oil. (See: Iran invites Brazil to join OPEC) 

Subsequently, other finds in the Santos Basin suggest Tupi's find may be just the tip of a huge reservoir of light crude.

Petrobras said that the Iara oil field find, can boost Brazil's oil production and turn the country into one of the largest oil producers in the world. It also put the estimated value for Petrobras stake in the Iara field between $10 billion and $15 billion.

Brazil's 12.6-billion barrels of proven oil reserves could nearly be doubled with the Tupi and Iara find thereby slowly moving towards recovering the unofficial estimated oil reserves contained in the subsalt band between 50 billion and 80 billion barrels.

Petrobras said the expected quality of Iara reserve was higher than that of other subsalt blocks in the Campos basin, including the giant Tupi field, and production costs are likely to be lower.

This find confirms the massive hydrocarbon potential of the subsalt layer off Brazil's coast and is the second official recoverable reserve in the subsalt cluster after last November's find of an estimated 8 billion barrels of light crude oil at the super giant Tupi field.

Iara, which covers a much smaller area than Tupi, holds light oil ranging between 26 and 30 on the API scale, similar to the find at Tupi.

The API gravity or the American Petroleum Institute gravity is a gauge to find out the density of petroleum liquid when compared to water. If the API gravity is greater than 10, it is lighter and floats on water; if less than 10, it is heavier and sinks.

Since lighter grades are easier to refine and fetch a higher price, Petrobras and its partners will stand to gain as there is scarcity of finds in large, light, sweet crude petroleum.

Petrobras has put a 12 to 18 month hold on drilling in the Santos Basin while it conducts seismic and various well tests, acquire rigs and raises the capital to operate them. The reserves in Tupi would require deep water rigs, which are expensive to operate as the reserves are buried seven kilometers under the waves, under a salt layer one kilometer thick.

Analysts opine that development of the subsalt fields around the Tupi, including Iara, Carioca, Parati, Jupiter and others, will require investments of $600 billion to $1.2 trillion in the coming decades.

PBR has partnered with some of the biggest American and international energy companies to leverage their experience and expertise. In a short time, Brazil has quickly become a major player in oil and gas exploration.

Brazil has ambitious plans to acquire refineries that may make its Petrobras the world's third-largest seller of gasoline and diesel and has embarked on a is on a $112.7 billion expansion, which may allow the country to overtake the output of all OPEC members except Saudi Arabia.