State-run energy company Petrobras on Friday lifted the first subsalt oil from the massive, ultra-deep, offshore Tupi field, an action Brazil's government hopes will launch a new era for Latin America's largest economy.

Petrobras (PETR4.SA)(PBR.N) shocked the oil world in November 2007 when it said the field contained up to 8 billion barrels of recoverable light oil and gas, which would make it the second-biggest oil find in 20 years.

It is a historic moment, a new era, President Luiz Inacio Lula da Silva said at an onshore ceremony commemorating the first oil from the Tupi field, after bad weather diverted his plans to visit the platform 300 kilometers (190 miles) offshore.

The Tupi is not be the first subsalt oil produced off Brazil, but it will set the tone for development of the rest of the 200-km-wide subsalt band stretching 800 km down the coast.

If reserve estimates for the Tupi are confirmed, it would vault Brazil into the world's top 10 oil producing countries. The government plans to use the wealth generated by these resources to transform Brazil into a developed country.

We are going to discuss what we want with from this oil, what we want for the Brazilian people, he said referring to the government's decision to change the regulatory framework for future subsalt oil exploration and production.

Soon after the size of Tupi was announced in 2007, the government suspended all oil round auctions of subsalt blocks. It has still not come out with a new regulatory model for developing the reserves.

In September, Lula helicoptered out and dipped his hands in the first subsalt oil produced at Petrobras' Juscelino Kubitschek offshore platform, named after a former president whose term was marked by economic progress and widespread optimism.

The oil from the Jubarte field off the coast of Espirito Santo came from depths of 1,375 meters (4,500 feet) -- no astonishing feat by oil industry standards. Lifting subsalt oil from the ultra-deep Tupi is an entirely different story.

The field lies 7,000 meters (23,000 ft) below the ocean surface, under 2,000 meters of corrosive salt at mind-numbing pressures and temperatures, 300 km offshore.

Although the government and Petrobras Chief Executive Jose Sergio Gabrielli say the technology and the will exist to profitably produce oil at these extremes, industry specialists are more skeptical.

There are still doubts about how much lateral continuity there is in the reservoir. It's a different kind of rock, an unknown reservoir and we don't know how it will behave, former Petrobras geologist Giuseppe Bacoccoli told Reuters.

He said the long-term production tests over the next 12 months that Petrobras initiated at Tupi on the May 1 national holiday will help determine if well pressure will drop and create problems for developing the field and other parts of the subsalt layer in the future.

The rock where the oil and gas is held, under the 2,000-meter-thick salt layer, is carbonate, as is commonly found in oil reserves in the Middle East.

Around 80 percent of Brazil's current domestic oil output of about 1.9 million barrels a day comes from the Campos Basin at much shallower depths from arenite rock, which allows Petrobras to re-inject gas and water to maintain oil pressure.

The carbonate always has a different behavior than arenite, which is more homogenous. We don't know if the subsalt will maintain flow with the same porousness throughout the reservoir or not, Bacoccoli said.

Petrobras is widely viewed as one of the most adventurous and technically capable oil firms in the world.

Energy