How Petrobras' (PETR3; PETR4) bet on pre-salt oil transformed Brazil into a major oil power

Brazil’s rise as a global oil powerhouse is rooted in one of the boldest industrial bets in its history. When the first exploratory wells in the pre-salt layer were proposed, the cost, depth, and geological challenges were so extreme that private partners walked away. Shell, then a partner of Petrobras, refused to drill, fearing the R$1 billion price tag per well and the uncertain chance of finding commercially viable oil nearly seven kilometers below the seabed.

But Petrobras, as a state-controlled company, made a different calculation: if the attempt failed, it would survive; if it succeeded, it could rewrite Brazil’s economic trajectory. That strategic risk set the stage for one of the most significant energy discoveries of the 21st century.

What Is the Pre-Salt Layer?

Geologically, the “pre-salt” refers to oil-bearing rock formations that were created before massive deposits of salt covered the region millions of years ago. Along Brazil’s southeastern coast, especially in the Campos and Santos Basins — the Santos and Campos Basins are large sedimentary basins located on the southeastern coast of Brazil, on the continental shelf, with the Campos Basin further north (coast of Rio de Janeiro and Espírito Santo) and the Santos Basin further south (coast of Rio de Janeiro, São Paulo, Paraná and Santa Catarina) —, layers of microorganisms formed rocky structures known as stromatolites, which over time became reservoirs of oil. Later, shifts in the Earth’s oceans left behind thick salt formations that buried these reservoirs under up to 7 kilometers of water, rock, and salt.

This salt layer acts like a geological curtain: homogeneous and dense, it blocks seismic waves and makes traditional imaging almost impossible. For decades, companies explored only the shallower “post-salt” layers.

The Breakthrough: Imaging Below the Salt

The turning point came when Petrobras geophysicists developed a proprietary data-analysis technique, enhanced by artificial intelligence, capable of amplifying the faint seismic signals that passed through the salt. This allowed them to identify oil-rich zones beneath the thick geological barrier.

The discovery was considered so strategic that strict security protocols were imposed. Even geological samples (“cores”) were handled under near-military secrecy inside Petrobras’ headquarters, given their potential impact on financial markets and national policy.

The Next Challenge: Drilling Through Salt

Finding oil was only the first obstacle. Drilling into the pre-salt presented another enormous challenge: unlike typical rock layers, salt is plastic. When a drill penetrates it, the walls of the well can collapse as the salt shifts and closes in.

To overcome this, Petrobras engineers spent years developing new drilling and cementing techniques, capable of stabilizing wells while drilling. This innovation drastically reduced costs and made large-scale extraction viable.

From Improbable Discovery to Economic Engine

Today, the pre-salt fields account for more than half of Brazil’s total oil production, generating tens of billions of dollars in tax revenue and foreign currency inflows. The reserves discovered in these deep layers rival those of major global producers, earning Brazil comparisons to a “South American Saudi Arabia.”

What began as a high-risk geological hypothesis became a technological triumph, and a central pillar of Brazil’s economic landscape.