Brazil: A massive oil discovery offshore in Sergipe.

Brazil's government will announce a massive oil discovery off the country's northeast coast later this month, according to acting Sergipe state Gov. Jackson Barreto.

Mines and Energy Minister Edison Lobao will travel to Sergipe's capital, Aracaju, on Oct. 23 to officially announce "the world's largest oil discovery of 2013," Mr. Barreto told Sergipe state's official news agency Friday. The event is also expected to include Magda Chambriard, director of the country's National Petroleum Agency, or ANP, Mr. Barreto said.

The two government agencies, however, downplayed prospects for an announcement. The Mines and Energy Ministry could not confirm Mr. Lobao's visit. In a statement, the ministry added that it "has no knowledge of any new oil discovery in the country other than those already announced by Petrobras."

The ANP, meanwhile, said that Ms. Chambriard would visit Sergipe on Oct. 23 to discuss the upcoming 12th-round auction of oil and natural gas exploration blocks. Ms. Chambriard's visit, though, was not related to any impending announcement of a major oil discovery, a spokeswoman said.

Last week, Brazilian state-run oil company Petroleo Brasileiro (PBR, PETR4.BR), or Petrobras, confirmed it had made a "relevant" discovery off Sergipe's coast that would start production of 100,000 barrels a day in 2018, Chief Executive Maria das Gracas Foster said. The executive declined to give any volume estimates for the oil fields.

Petrobras first announced a series of discoveries in late 2012, saying the finds had opened a "new oil frontier" in the country. The discoveries are closer to shore and could be much cheaper to develop than larger oil fields, known as the presalt, found buried under a thick layer of salt deep under water off Brazil's southeast coast. Billions of barrels of crude have been discovered in the region, and the government plans to auction off a field there known as Libra under new production-sharing agreements later this month. Libra is estimated to hold recoverable reserves of between 8 billion and 12 billion barrels of oil.

The Sergipe discoveries have geologists rethinking their models of the area, where the unexplored shallow-water areas of what's known as the Sergipe-Alagoas Basin were thought to hold between 500 million and 1.5 billion barrels of recoverable reserves. Petrobras's discoveries were made in water 2,500 meters deep.

Petrobras operates the exploration blocks containing the new discoveries with a 60% stake. The remaining 40% stake belongs to IBV-Brasil, a joint venture between Indian companies Bharat Petroleum Corp. (500547.BY) and Videocon Industries Ltd. (511389.BY).

Brazil's state-led oil company, Petroleo Brasileiro SA, and its Indian partners have made a "beautiful" oil discovery off Brazil's northeast coast and it will produce a minimum 100,000 barrels of petroleum a day starting in 2018, the company's chief executive officer said on Friday.

Maria das Graças Foster, the chief executive, declined to say how big the discovery is but said it was an important new oil "province" for Brazil and that its large potential reserves would create a rush of jobs and activity to the area that will need to be managed carefully.

On Thursday, Reuters exclusively reported that the discovery, centered on the SEAL-11 offshore exploration block, likely holds more than 1 billion barrels of oil and that the region will soon become Brazil's biggest new oil frontier.

The SEAL-11 block is 60 percent-owned by Petrobras and 40 percent-owned by IBV Brasil, a 50-50 joint venture between India's Bharat Petroleum Corp (BPCL) and Videocon Industries Ltd.

"In 2008 we decided to do a very extensive investigation of the area, and the results we have got have been very good," Foster told reporters at company headquarters in Rio de Janeiro. "This is a beautiful discovery, beautiful discoveries."

In addition to light, high-quality crude oil, the region has important quantities of gas, she added.

Two prospects in the area, known as Farfan and Muriu, are expected to be developed as a single or integrated unit, with at least one floating production, storage and offloading ship (FPSO) producing oil and gas from the area in 2018, Foster said.

Foster said that was the minimum outlook for the area based on spending in the company's $237 billion 2013-2017 investment plan drawn up before the latest drilling and tests in the area.

If confirmed, the new find could make the region the country's biggest new oil frontier since the government unveiled the massive subsalt discoveries off the coast of Rio de Janeiro and Sao Paulo states in 2007.

REFINERY PLANS

Foster also said that Petrobras is totally reforming its plans to build two low-sulfur diesel refineries in Brazil's northeast. The so-called premium refineries planned for the states of Maranhao and Ceara were showing signs they would not be profitable.

The Maranhao refinery is expected to cost about $20 billion to build.

Petrobras, however, has reworked the projects with the help of U.S. based consultants, Foster said, and those projects are now looking stronger. The company hopes to start putting the refineries out to tender as early as March, she said.

The company is also in talks with a Chinese company to take a stake in the Maranhao project, Foster said. The project could lead to the Chinese partner taking a majority stake, she added.