First oil in the Tupi Pilot Project

Rio de Janeiro, October 27 2010 – Petróleo Brasileiro S.A. - Petrobras announces that it will start tomorrow at the FPSO Cidade Angra dos Reis, the first definitive production system installed in the Tupi area, in the Santos Basin pre-salt cluster.

The FPSO (oil and gas floating production, storage, and offloading system) is initially connected to the RJS-660 well, which will undergo technical testing until the Declaration of Commerciality (DC) is made for the field, slated for late December, when the process of interconnecting it to other producing wells will be completed and the Tupi area will enter the production development phase.

It is installed in an area near the FPSO Cidade de São Vicente, which has been performing the Extended Well Test (TLD) for Tupi since May of last year and has already produced about seven million barrels of oil. The pilot system, whose activities will begin after the DC, will complement the technical data collected by the TLD with critical information about the reservoir and the production. These data are essential to design the future units that will operate in the pre-salt. It will also contribute both to improve the well construction and subsea production collection projects, and to assess how different recovery methods (oil extraction) perform in the reservoir.

The unit will produce light, high commercial value oil and will kick-off the final Tupi production system, which will collect basic technical information for the development of large accumulations of oil discovered in recent years in that sedimentary basin.

The consortium that is undertaking the production in the BMS-11 block, where the Tupi oil accumulation is located, is formed by Petrobras, which is the operator, holding 65% of exploration rights, BG Group (25%), and Galp Energia (10%).

Declaration of Commerciality

With the completion of the TLD and the drilling of additional exploratory wells, Petrobras will send the Final Assessment Report for the Tupi area, together with the Declaration of Commerciality for the field, to the National Petroleum Agency (ANP).

To date, nine wells have already been drilled in that accumulation, with excellent results for the company. The ninth exploratory well, completed last week, confirms the field's high light oil and natural gas recovery potential, which the company estimates between 5 and 8 billion barrels of oil equivalent. This well also proved that the oil accumulation not only extends to the far south of the Assessment Plan area, but also that the oil-bearing reservoir is about 128 meters thick, reducing hydrocarbon volume estimate uncertainties in the area. Two more wells are scheduled to be drilled by late December.

Technical Features

The FPSO Cidade de Angra dos Reis, chartered from Modec, is moored at a water depth of 2,149 meters and is capable of producing up to 100,000 barrels of oil and to process up to five million cubic meters of gas per day. At the peak of production, six oil-producing wells, a gas injector well, a water injector, and another injector that can inject water and gas, alternately, will be connected to the vessel.

The oil that is produced will be transferred to land on shuttle tankers. The gas will be separated from the oil in the FPSO'S facilities. A part may be used for on board power generation, while there will be two uses for production surplus: it may be reinjected into the oil reservoir in the production process or exported to shore via a gas pipeline that will connect the FPSO to the Mexilhão platform, which operates a gas field in shallow waters in the same basin. From Mexilhão, the gas will flow to the Monteiro Lobato Gas Treatment Unit, which is currently under construction in the city of Caraguatatuba (state of São Paulo), to be treated before being shipped off to the consumer market.

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