Brazil, the New Oil Superpower
State-run Petrobras' "monstrous" new oil find has wide-ranging implications for the South American country, the oil majors, oil services providers, and beyond
by Joshua Schneyer
In a recent radio broadcast, Brazil's President Luiz Inácio Lula da Silva said he's convinced a "higher power" has taken a shining to Brazil. That, he said, might explain the providence of state-run oil company Petrobras (PBR), whose colossal new oil discovery could transform Brazil from a barely self-sufficient producer into a major crude exporter.
Petrobras announced Nov. 8 it has found between 5 billion and 8 billion barrels of light oil and gas at the Tupi field, 155 miles offshore southern Brazil in an area it shares with Britain's BG Group and Portugal's Galp Energy. Tupi is the world's biggest oil find since a 12 billion-barrel Kazakh field was discovered in 2000, and the largest ever in deep waters. Perhaps more important, Petrobras believes Tupi may be Brazil's first of several new "elephants," an industry term for outsize fields of more than 1 billion barrels.
Initially, Tupi will produce about 100,000 barrels a day but may ramp up to as much as 1 million before 2020—more than the biggest U.S. field in Alaska's Prudhoe Bay, says Hugo Repsold, Petrobras' exploration and production strategy manager. "It's monstrous," says Matthew Shaw, a Latin America energy analyst at consultant Wood Mackenzie in London.
Blocking Private Companies
Given the discovery's magnitude, Tupi already is changing how Brazilians think about their oil riches. It even tempts the kind of oil nationalism that has prompted Venezuelan President Hugo Chávez to expropriate oil reserves and production infrastructure in Venezuela from oil majors ExxonMobil (XOM) and Chevron (CVX).
Indeed, a day after Petrobras announced the Tupi discovery, Brazil said it would remove 41 oil exploration blocks, located near Tupi, from an upcoming auction of potential oil fields open to private oil companies. Brazil still plans to offer 271 blocks for bidding, however, the government said it's reanalyzing whether, and how, to share Brazil's new oil riches with private companies, after a decade of relatively open concessions.
Brazilian oil regulator ANP says it's drafting a new oil bill to present to congress that would change energy laws, perhaps limiting the role of private companies in Brazil's subsalt. Additionally, Lula says Brazil should join OPEC once Petrobras begins oil output from Tupi, around 2011.
"This looks to have triggered a major debate about the role of state vs. private oil companies here," says Sophie Aldebert, a director at Cambridge Energy Research Associates. "But Brazil is going to want to continue working with private companies."
Rest of article is here.
This has plenty of ramifications. First of all, this is yet another country in this hemisphere with oil, but not tied to the United States.It's not as hostile as Venezuela, but it's far from being a lackey of the USA. Second, this could be a true financial boom to Brazil, who weaned itself off of depending upon foreign oil awhile ago. I bet most folks don't know that Brazil fuels its cars mostly with SUGAR. So, the oil that they produce doesn't have to be consumed by its people - they can sell it to others, making more money for Brazil. Brazil's economy is already diversified, so it's not dependent upon oil being a one trick pony economy.