UPDATE 3-Brazil's OGX sees up to 1.5 bln barrels in Campos

Brazilian oil company OGX said on Wednesday a recent discovery in the offshore Campos Basin likely holds up to 1.5 billion barrels of crude, a sign Brazil may have major oil reserves outside the coveted subsalt region.

Brazil's 2007 discovery of massive reserves in ultra-deep waters drew the world's attention to the subsalt province while overshadowing prospects in the shallower Campos Basin waters that currently provide most of the country's oil.
If confirmed, OGX's discovery continue here in the BM-C-43 concession block could be similar in size to the Parque das Baleias and Guara subsalt fields operated by state oil company Petrobras (PETR4.SA)(PBR.N).

"This excellent result shows the great oil potential of our blocks as well as contributing to the reduction of exploration risks in the next prospects to be drilled in the region," OGX's general director Paulo Mendonca said in a statement.

OGX (OGXP3.SA) drilled the well in waters with a depth of up to 2,347 meters (7,700 feet), compared to as much as 7,000 meters (22,966 feet) in subsalt projects like the giant Tupi field that holds 5 billion to 8 billion barrels of reserves.

"Finding oil is always good news, and the fact that the discovery is outside the subsalt region is also good news -- it shows that there is a lot do outside the subsalt," said Adriano Pires of the Brazilian Infrastructure Center, a consulting group in Rio de Janeiro.

The government in 2007 halted new auctions of offshore blocks while it prepared changes to oil laws, currently being discussed in Congress, to boost Brazil's share of revenues from subsalt fields.

Petrobras would be the sole operator of new subsalt projects under the proposed framework.

The company's five-year business plan focuses heavily on the subsalt region as production at the Campos Basin fields are expected to decline in the coming years.

OGX Petroleo e Gas Participacoes is part of the EBX energy and infrastructure conglomerate owned by Brazilian billionaire Eike Batista. OGX went public in June last year in what was, at that time, the biggest initial public offering ever in Brazil.

Batista, who has a reputation as a risk taker, paid more than $1 billion for drilling rights for 21 offshore blocks at an auction in 2007, upstaging oil majors such as Petrobras and Devon Energy Corp (DVN.N).

Despite Wednesday's announcement, OGX shares erased early gains and fell 4.13 percent to 1,556 reais in late afternoon trading.

"There was already a big expectation about this well," said a Rio de Janeiro trader who did not want to be identified.

OGX shares jumped in recent weeks after it reported traces of oil in the Campos and Santos basins off Brazil's southeastern coast. (Reporting by Stella Fontes, Brian Ellsworth, Stuart Grudgings and Ana Nicolaci da Costa; editing by Jim Marshall)



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