The research, which set out to show government figures were too optimistic, found they underestimated the area’s potential, said Hernani Chaves, a professor at the Rio de Janeiro State University who worked at Petrobras for 35 years. The forecast, which the study puts at a 90 percent probability, compares with the Brazilian oil regulator’s 50 billion-barrel estimate.

“We started with a skeptical view and finished with bigger numbers,” Chaves said in an interview at the university, in the city of Rio. “When we got the first results I said: ‘Something is wrong, it’s too big.’”

Petrobras, which currently has 16 billion barrels of proven reserves, is investing more than $200 billion in five years as it taps the so-called pre-salt fields lying two miles below the ocean surface and another two to four miles beneath the seabed. The deposits include the Americas’ two largest oil discoveries since Mexico’s Cantarell in 1976. Royal Dutch Shell Plc, Repsol YPF SA and Exxon Mobil Corp. also operate blocks in the area. BG Group Plc and Galp Energia SGPS SA hold minority stakes.

Share Rise

Petrobras climbed as much 0.8 percent to 27.95 reais in Sao Paulo trading, reversing an earlier decline. It fell 0.7 percent to 27.53 reais at 11:42 a.m. New York time.

Brazilian lawmakers passed a bill last year making Petrobras the operator of all new exploration licenses in the pre-salt and other areas deemed strategic. Rights to explore more than half of the region are yet to be auctioned. The oil producer controls or has stakes in 85 percent of all the existing licenses. The area likely holds 60 new fields with an average size of 2.2 billion barrels, according to the study.

Petrobras also received the right to 5 billion barrels of pre-salt oil from the government as payment for stock in its $70 billion share sale last year, the world’s biggest ever.

Chaves and Cleveland Jones, a professor at the same university and co-author of the study, found there’s a 10 percent chance the region holds 206 billion barrels of oil and natural gas, which would surpass the estimate of 172 billion barrels for Venezuela at the end of 2009 in BP Plc.’s Statistical Review of World Energy. Venezuela currently has Latin America’s biggest proven reserves.

Libra

The researchers are less optimistic than the oil regulator on the size of the government’s Libra field, the country’s largest. They estimate Libra holds about 5 billion barrels, compared with as much as 15 billion estimated by the ANP, as the regulator is known.

The two geologists used software from Oslo-based GeoKnowledge, an oil consulting firm, and the Monte Carlo statistical model the U.S. Geologic Survey uses to calculate undiscovered oil and natural gas resources around the world. Monte Carlo predicts potential discoveries based on the history of exploration successes and failures in an area.

Petrobras Estimate

Petrobras estimates reserves of up to 16.8 billion barrels at four pre-salt fields where it has drilled and tested wells including Lula, its biggest prospect, the company said in an e- mailed response to questions. The company didn’t provide an estimate for the entire area and declined to comment on the study.

The study assumes fields in the pre-salt region, an area bigger than Florida, will have a recovery rate of 25 percent to 30 percent, Chaves said. The rate measures the percentage of oil that can be extracted from a reservoir and that counts as reserves.

Brazilian President Dilma Rousseff said the pre-salt may hold 100 billion barrels in 2009, when she was cabinet chief for her predecessor, Luiz Inacio Lula da Silva.

Magda Chambriard, a director at ANP, said last year the pre-salt may hold more than the 50 billion-barrel estimate the agency uses in presentations.

The costs and technical challenges involved in pumping oil from ultra-deep fields will likely slow development of the reserves, Chaves said. It will cost trillions of dollars to develop the entire area, he said.

Petrobras expects to boost recoverable reserves to up to 35 billion barrels by 2014. The company’s proven reserves, or oil that can be extracted with existing infrastructure, rose 7.5 percent in 2010 to 16 billion barrels, the company said Friday.

**Peter Millard in Rio de Janeiro at Pmillard1@bloomberg.net