Brazilian Oil Story: From Brags to Glitches

Deep in the Atlantic Ocean, under a layer of salt, lies a massive oil field that could make Brazil a major player in global oil exports, speculators say.

This oil field has sent spirits and markets in Brazil soaring, only to end in bickering and criticism.

On Monday, remarks made by Haroldo Lima, the head of Brazil's national oil agency ANP, caused flutters of excitement when he revealed during a conference that the latest petroleum finding off the coast of Brazil -- the Carioca field -- could potentially contain up to 33 billion barrels of oil.

This would make it the third largest oil field in the world and turn Brazil into the seventh largest producer of oil.

The excitement that Lima caused was quickly tempered, however, by a sobering statement from Brazil's state-run oil company Petrobras, which warned that so far no official figures had been presented to reveal the true volume of the Carioca field.

The brags to glitches strategy triggered a flood of criticism.

Questions were raised over whether this was a deliberate act to boost Brazilian markets and Petrobras' share price. The front page of one of Brazil's major newspapers even questioned whether the company could face legal consequences for making such comments without official figures to back up the hype.

There is also the question of ownership. Carioca is not solely owned by Petrobras. European energy companies Repsol and BG both own stakes in the field and the remarks caused ripples on major stock exchanges in Sao Paulo, Madrid and even New York.

Much has already been made of the Carioca find. Earlier this year, journals published in Houston and Sao Paulo also referred to Carioca's enormous potential but without proof it remains just that, potential.

On Thursday, Jose Sergio Gabrielli, the CEO of Petrobras, said that "the work being conducted on the Carioca oil rig is still in development." He added, "We cannot confirm anything besides what we know at this point. There is real exploratory potential but we don't know what the volume is."

Part of the reason why there is so much excitement is that this is potentially the third discovery of fuel in Brazilian territory in the last year.

Brazil's existing oil reserves total 11.8 billion barrels.

In November, there was an official announcement of an oil field named Tupi, off the coast of Rio, which holds up to 8 billion barrels of oil, one of the largest fields to have been discovered in the last 20 years. Then two months later, a natural gas field called Jupiter with the dimensions of Tupi was discovered nearby.

But the issue at stake here is getting to all these resources. Petrobras is one of the world's leaders in deep sea oil prospecting but it's a process that takes time.

"Most markets project that results will only be seen beyond 2014," Chris Garman, an analyst with the Eurasia Group, told ABC News.

"As Petrobras and other companies begin to prospect and conduct geological surveys, we're going to have a better notion of the true size of the reserves and the requisites for extraction."

Money is also an issue: Getting to these reserves is expensive work and someone has to foot the bill.

The news of the reserves may have buoyed the markets but realistically the Brazilian government will have to implement taxes and rules that may not be favorable to private investors.

"Brazil might not attract as much heavy investment as it could," said Garman. "Therefore potential production down the road will not increase as quickly."

If all the conjecture about Carioca turns out to be true, this could herald a new age of prosperity in Brazil's history.

Thanks to its existing oil reserves and biofuel programs, Brazil is already self-sustaining in terms of its energy needs. A possible discovery of 33 billion barrels of oil in its waters could make it a major oil exporter, allow it to artificially suppress its prices and potentially be invited to join OPEC.