UPDATE 3-Brazil's subsalt oil profitable at $55, official says
(Adds Petrobras comment, paragraph 5)
RIO DE JANEIRO Oct 20 (Reuters) - Brazil's giant offshore subsalt oil and gas areas will only break even with oil worth $55 a barrel or more, Oswaldo Pedrosa, chief executive of state-owned oil-asset management company Pre-Sal Petroleo SA, said on Tuesday.
The $55 a barrel figure is 14 percent higher than the current benchmark Brent crude oil price and 22 percent higher than the $45 a barrel break-even figure previously given by Petroleo Brasileiro SA or Petrobras, Brazil's state-controlled oil company.
Pedrosa said the break-even estimate also applies to Libra, the 8 billion to 12 billion barrel prospect being developed by Petrobras, Royal Dutch Shell Plc, Total SA and China's state-owned CNOOC and China National Petroleum Co.
If costs in the subsalt are that high, Petrobras, the world's most-indebted major oil company, faces serious strains on its already stretched finances. Some of its most important and highest producing fields may be operating at a loss.
In a statement, Petrobras said that it is "stepping up its capacity to produce oil and gas in the subsalt region in an economically feasible way."
Pedrosa, who will oversee the government's share of output from Libra and other new developments in the subsalt, is putting his hopes in a recovery in oil prices by the end of the decade, when Libra is expected to start producing.
"Is Libra operating at a loss?" he said at an event in Rio de Janeiro. "No, because it hasn't entered in operation."
While prices might be low nowadays, he noted that "by the end of the decade, certainly, prices won't be where they are now." Continuación...