In a Hamstrung Oil Industry, Petrobras Will Rule
While the US under President Barack Obama is performing a self-castration in its energy prowess and posture, Brazil, under Luiz Inacio Lula da Silva, a firebrand socialist and not a particular friend of the US, is poised to emerge as an energy superpower.
Obama and many of his core supporters have a mystifying aversion to energy, perhaps the most important commodity in the modern world and arguably the one that closely equates to power. It may be ideologically consistent to be against fossil fuels and espouse every environmentalist fantasy but, in the 21st century, energy and energy abundance is the national trait that separates the rich countries from the poor ones. Lula understands this (and Vladimir Putin and Hugo Chávez before him); Obama does not.
Instead of worrying about the 87 percent of the energy mix that will comprise the US energy mix for decades (oil, natural gas and coal) the current US government and its officials are consumed by unrealistic and far-fetched alternatives such as solar and wind and the-even-more-preposterous bogeyman of climate change in their crusade to “save the planet.”
None of these things seem to concern Brazil, which has emerged in the last decade not only as the location of some of the largest offshore oil and gas fields ever discovered (US companies are not even allowed to look in many US coastal areas) but also, through its excellent oil company, Petrobras, a publicly traded company, as the holder of an even more important asset, leadership in what is arguably equal to space-age technology: drilling and producing in deep water. Brazilians think of Petrobras as the national treasure. For many in the US, ExxonMobil, Chevron and ConocoPhillips are the devils incarnate.
Brazil, a nation of 180 million, will use its oil to become a superpower in the not too distant future and, after reaching self-sufficiency in oil last year, it is eager to become an ambitious exporter of oil. Already Lula has made overtures to the obvious, China, heading a large delegation to Beijing in mid-May, showcasing oil, and walking away with a $10 billion oil export deal. It is just the beginning.
Ironically, US politicians have expressed interest to imitate Brazil for all the wrong reasons. A few years ago, former President Bill Clinton asked “why can’t we be like Brazil” but what he was admiring was Brazil’s ethanol production as part of their motor fuel mix. That was done before the discrediting of biofuels and, even for that issue, Brazil does it better using sugarcane rather than corn. Brazil also shows their relative emphasis: their budget for oil and gas development is more than 30 times their budget for biofuels.
In the last decade, Brazil has discovered massive oil and gas reserves in their offshore Campos Basin (where 82 percent of their current oil and gas comes from), Espirito Santo Basin and, thanks to huge technological advances, in the pre-salt formations of the Santos Basin. Of the oil fields discovered in the last 30 years only Kazakhstan’s Kashagan is bigger than Brazil’s Tupi field, discovered below 7,200 feet of water. That in itself is quite an accomplishment, capping a longer than 30 year evolution of deeper and deeper offshore drilling. Brazil now accounts for 22 percent of the world’s deepwater oil production. It will grow a lot bigger.
Petrobras operates as many sophisticated deep water offshore floating production systems as the next three biggest companies -- Shell, Norway’s Norsk Hydro and ExxonMobil -- combined.
The brashest message by Petrobras, delivered by its CEO José Sérgio Gabrielli de Azevedo in their recent visit to China, is that the company’s oil production, currently at 2.76 million barrels per day will climb to 3.66 million by 2013 and will more than double by 2020 to 5.7 million barrels per day. It will make Petrobras the largest publicly traded oil company, a third larger than ExxonMobil.
The Petrobras success, along with the hamstringing of the US oil industry, which has the technological capacity to compete and excel in the field, points to an unprecedented, ideologically driven hara-kiri and an abrogation of national and economic power that the world has never seen before. Wind, solar and biofuels can never compete in the world of Petrobras.
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