bluray project smaller than used files

Hi folks at creative cow,
I have got a very frustrating problem. I tried to authorize a single layer bluray disc and started a 1080p project in Cs5. I imported a 1080p video file in mpg format which is 16GB in size. However,after having added it to the project, encore tells me that the project is 9GB big... how's that possible? What am I doing wrong?

Thank you in advance...

Sorry, don't get it. I have a 1080p mpg file with a lot of photos. It takes around 1h 20m. It is 16GB in size. Now I import it into Encore and suddenly it is only 9GB in size although it still takes 1h 20m and the whole project also is in 1080p... I don't compress nothing...

Hi,
well, I exported a photo show and the program gives me the following options while exporting:

Video preset - Type: HD, Quality: 1080p
Format: MPEG 2 (no other choice possible)
Compression: MPEG VIDEO (no other choice possible)
Resolution: 1920x1080 (no other choice possible)
Framerate: 59.94 (no other choice possible)

Aspect Ratio: 16:9 / 4:3 / Square Pixels
Encoding: Normal quality / High quality
Desaturation: checked, Desaturate images to 80%
Anti-Flicker: checked, Apply anti flicker filter to video.

That's all I can adjust before creating a HD video file. And this mpg file is about 16gigs in size, but in Encore its size decreases.

@Jeff: Thanks for your post, but as you can see, I don't work with Premiere in that case. I'm struggling with the photo show software that just lets me export HD mpg files with the above mentioned settings.