RIO DE JANEIRO - PRESIDENT Luiz Inacio Lula da Silva inaugurated on Tuesday Brazil's first extraction of oil from deep waters which highlighted techniques to be applied to vast oil fields found even farther offshore at greater depths.

Mr Lula led the ceremony on board the platform P-34, owned by the state-run company Petrobras and located over the Jubarte oil field 77 kilometres off the coast of the Brazilian state of Espirito Santo.

The 15,000 barrels of oil the platform will pump up each day come from a depth of 4.4 kilometres, including - most problematically - a layer of salt 100 to 200 metres thick.

Petrobras considers P-34 a test facility for the far greater prize contained in the Santos Basin, an oil-rich zone farther south that lies between 250 and 800 kilometres off the state of Rio de Janeiro.

That basin contains the Tupi field, whose discovery was announced in November last year and which is estimated to contain up to eight billion barrels of oil - enough to turn Brazil into an oil exporter on par with smaller Opec countries.

Other, subsequent discoveries in the Santos Basin suggest Tupi may be just the tip of a huge reservoir of light crude that, in total, could conceivably triple Brazil's proven oil reserves, which are currently a proven 14 billion barrels.

The problem is that Tupi's oil is located seven kilometers under the waves, under a salt layer one kilometre thick.

Salt is a significant challenge to oil extraction because it shifts and exerts pressure, creating the risk of breaking pipes.

In March next year, exploratory pumping will start in the Tupi field and, if it proves viable, commercial pumping will begin in 2012.

Analysts say that up to US$600 billion (S$859 billion) worth of investment in research, logistics and technololgy are required to suck up the oil under Brazil's Atlantic waters.

Petrobras has already planned US$112.4 billion worth of investment over the next four years, but its chief, Sergio Gabrielli, has said that amount will 'surely increase' because of the new oil finds.

The prospect of sitting on an oil bonanza has led Brazil to rethink how it deals with foreign oil companies wanting a piece of the action.

It is also considering creating a new state company to manage the deepwater oil reserves, or increasing its stake in Petrobras beyond the current 60 per cent, to ensure it keeps control over the fossil fuel find.

Mr Lula has said he wants to use part of the revenues from the oil to fund education and poverty-reduction programmes. -- AFP