The plan will strengthen the state oil company and give Brazil enough money to create a fund to eradicate persistent misery and improve education and technology, Silva said.

"This Monday, August 31, represents a new Independence Day for Brazil," he said on his weekly radio show hours ahead of a ceremony to unveil the proposal.

Silva was expected to announce the creation of a new agency called Petrosal to oversee the 50 billion to 100 billion barrels of oil that lies deep under the ocean floor off the coast of Rio de Janeiro.

The agency will also determine foreign investment and participation in extraction.

Government's stake

Silva was also expected to announce an infusion of as much as US$50 billion into Petroleo Brasileiro SA to strengthen the state-run oil company and increase the government's stake.

Silva said that an oil-backed government fund will invest in education, science, technology and social programmes to lift millions of Brazilians out of poverty. He did not disclose details.

The plan must be approved by Congress, and some experts predict a lengthy battle as states where the oil lies vie for royalty benefits.

Opposition politicians also are already saying Silva's plan is a political ploy to try to give his Workers Party a big edge in next year's presidential and congressional elections.

Alternative energy

The discovery of the oil in 2007 came after Brazil spent decades developing alternative energy as an issue of national security following severe energy shortages in the 1970s.

The nation uses hydroelectric power for more than 80 per cent of its energy needs and is the world's largest exporter of ethanol.

Nine of every 10 cars sold in the nation can run on ethanol or a combination of ethanol and gasoline.

Thirty years ago, more than 85 per cent of Brazil's oil came from foreign sources. Today, it is a net exporter.

The newly found fields lie more than a mile below the ocean's surface and under another 2.5 miles (4 kilometres) of earth and salt.

Brazil has rebuffed invitations to join the Organisation of Petroleum Exporting Countries since the fields were discovered, saying it has no plans to export crude from the new fields because it can get more money by refining the oil into derivative petroleum products like gasoline and then shipping it abroad.

"We want to export derivatives because we need a big petroleum industry in Brazil," Silva said.

- AP