On a seabed off Brazil , Petroleo Brasileiro SA is separating water from oil as it pumps the crude from beneath the Atlantic. No company had done that before.

The process, which takes the separation and reinjection mechanism off oil platforms, is the first of its kind in waters deeper than 1,000 feet and frees space so platforms can serve more wells. It was developed by state-run producer Petrobras and FMC Technologies Inc. (FTI) at a research and development center that boasts 227 laboratories on an island off Rio de Janeiro .

Without developing technologies like this, Petrobras will struggle to haul in the world’s biggest discoveries this century, trapped beneath a sub-sea layer of salt off Brazil’s southeastern coast, including the giant Libra prospect up for auction in October. The state-run company invested $1.13 billion, or 0.8 percent of sales, in R&D last year, the highest rate of the world’s 17 most valuable oil producers, according to data compiled by Bloomberg. Exxon Mobil Corp. (XOM) spent 0.3 percent.

“We are gaining confidence day by day, investing a lot, putting our best guys here,” Jose Roberto Fagundes, the center’s deputy head, said in an interview from the center. “Five years ago we had an idea, we knew there was something different but we didn’t know exactly how risky it would be.”

Growth Key

Petrobras engineers analyze work on a tailor-made screen in high definition at the center, which is down the road from R&D units run by at least six other oil-related companies. Fundao Island -- where Petrobras scientists work some 11 miles away from Copacabana beach and the average temperature is 75 degrees Fahrenheit (24 degrees Celsius) -- has become one of the world’s richest spots for advanced study into squeezing the last drop of oil from a well.

For Petrobras and partners such as Britain’s BG Group Plc (BG/) and the Repsol Sinopec Brasil SA (REP) joint venture, research into Brazil’s so-called pre-salt fields may hold the key to future production. They’re trying to end the mystery around just how oil flows out of these off-shore carbonate reserves, which vary from field to field and are unlike any other that have been developed worldwide. Both BG and Repsol have said the Brazilian pre-salt is a key pillar of their future.

Petrobras preferred shares have dropped about 6.5 percent this year, compared with gains of 15 percent and 16 percent for Repsol and BG, respectively.

Carioca Challenge

The Carioca prospect, one of the pre-salt’s five biggest discoveries, offers an example of the challenges, Fagundes said. The companies have until Dec. 31 to declare it commercial.

Carioca’s high paraffin levels make it hard to pump crude to the surface, as temperature changes can make it solidify. The companies are looking at the most efficient way to keep the oil flowing, Fagundes said. Carioca wells produce as much as 28,000 barrels a day, according to a statement from BG.

Research at the Cenpes technology center has also helped companies deal with the uncharted geological and operating conditions to drill horizontal wells through a layer of salt as thick as 2,000 meters under the Atlantic seabed, at both the Lula and Iara fields.

“Petrobras is the world leader in deep and ultra-deep water production,” Michel Curletto, a consultant at the IFB technological research institute in Rio, said by e-mail. The company wants “to develop technologies that allow it to surpass the barriers of new production frontiers,” he said.

Dinosaur Statues

In the R&D center’s main building, where white-coated staff study crude viscosity and geological permeability, is a courtyard with a collection of small statues of dinosaurs. The statues stand around a pool in the middle of which is a globe representing the world before the continents split.

Knowledge that Africa and South America were once a single body of land is what led producers to hunt for pre-salt oil off the coast of Angola , where discoveries have been made and 20 exploratory wells are scheduled to be drilled next year. In Brazil, Petrobras produces about 310,000 barrels of oil per day in the pre-salt and plans to reach 2 billion by 2020. It’s already the biggest producer in waters deeper than 1,000 feet.

In an auditorium at Cenpes, Petrobras has set up a film screen with five times more resolution than any sold by television makers LG Electronics Inc. (066570) and Samsung Electronics Co. that shows computer generated replicas of oil platforms and their sub-sea production systems. The images are generated with software developed by Petrobras and a Rio de Janeiro university.

The images shown on the screen, combined with a 3-D simulator set up in an adjacent room, allows engineers, scientists and other researchers to analyze the production systems without interfering with operations.

Not Alone

Petrobras is not alone in its technological drive in Brazil. By law, producers that have concessions in the country’s top oil fields, such as the pre-salt ones, must invest 1 percent of revenue in technology for fields under a regime known as special participation. Other areas have lower thresholds.

Companies including FMC, Schlumberger Ltd, Halliburton Co. (HAL) , and Baker Hughes Inc. (BHI) , all of which are Petrobras suppliers, have set up regional R&D centers in the same island and BG is building its global technology headquarters there. After working with Petrobras on the sub-sea injection system, Houston-based FMC developed a similar project with Royal Dutch Shell Plc. in the Gulf of Mexico .

While the FMC-Petrobras collaboration is not for pre-salt, the bulk of the research in Brazil is focused on the pre-salt.

“Because of the size of the pre-salt, we were able to convince them to open their R&D centers here,” Petrobras’s Fagundes said. “We develop the hardware for our technology with our suppliers. We share our needs.”

‘Very Remote’

The Brazilian producer’s R&D has led to the filing of 175 patents in the three years through Dec. 31, 2012, the company’s press office said by e-mail. The patents range from sub-sea pumping systems to a process to produce hydrogen from ethanol.

The novelty of the pre-salt and the physical distances involved in extracting the underlying oil are the main challenges faced by Petrobras, according to Ruaraidh Montgomery, a senior analyst at oil and gas researcher Wood Mackenzie .

“When they moved into deep waters, they were really a pioneering company,” Montgomery said in a phone interview from Houston. “Now we have the pre-salt, a very remote location.”