VZCZCXRO1611
RR RUEHRG
DE RUEHRI #0014 0211523
ZNR UUUUU ZZH
R 211523Z JAN 09
FM AMCONSUL RIO DE JANEIRO
TO RUEHC/SECSTATE WASHDC 4748
INFO RUEHBR/AMEMBASSY BRASILIA 1073
RUEHSO/AMCONSUL SAO PAULO 5223
RUEHRG/AMCONSUL RECIFE 3488
RUCPDOC/USDOC WASHDC
RHEBAAA/USDOE WASHDC

UNCLAS RIO DE JANEIRO 000014 

SIPDIS 

STATE FOR WHA/BSC, WHA/EPSC, EB/ESC 
USDOC FOR 4332/ITA/MAC/WH/OLAC/JANDERSEN/ADRISCOLL/MWAR D 
USDOE FOR CAROLYN GAY AND RHEA DAVIS 

E.O. 12958: N/A 
TAGS: ENRG EPET EINV BR
SUBJECT: US OIL COMPANIES ONE STEP CLOSER TO PRE-SALT OIL DISOVERY IN BRAZIL'S SANTOS BASIN 

REFS: A) 07 Sao Paulo 899, 
B) Rio de Janeiro 91, 
C) Rio de Janeiro 35, 
D) Rio de Janeiro 138, 
E) Rio de Janeiro 135, 
F) Rio de Janeiro 159, 
G) Brasilia 910, 
H) Brasilia 1122,
 I) Rio de Janeiro 237, 
J) Rio de Janeiro 235, 
K) Rio de Janeiro 237, 
L) Rio de Janeiro 245 

¶1. U.S. oil companies Exxon and Hess, together with Brazilian partner Petrobras, have found evidence of oil in their highly anticipated pre-salt exploration block in Brazil's Santos Basin. Exxon, which operates the well, and Hess each own 40 percent of the concession while 20 percent is held by Petrobras. 

¶2. The discovery was made at well 1ESSO3SPS (test well that began drilling in October 2008) in the BM-S-22 block at a water depth of 2,223 meters (7,294 feet), the National Petroleum Agency released on January 20. The companies haven't determined if the find can be developed commercially but energy insiders expect the discovery in this block, called "Azulao", to be larger than the neighboring "Tupi" block which is currently the largest confirmed pre-salt find at 5-8 million barrels. The Azulao block lies at the apex of what geologist consider the largest structure of the pre-salt oil and gas reserves. 

¶3. Unrelated to the Azulao announcement, Exxon CEO Rex Tillerson visited Brazil last week. His trip took place among speculation that, with almost $37 billion of cash on hand, the company may be positioning for a major deal. Rumors circulating include a takeover of Shell, a merger with BG Group (which also holds a major stake in Brazil pre-salt), or a partnership with Petrobras to finance and develop pre-salt oil development in Brazil. 

MARTINEZ