Brazilian President Luiz Inácio Lula da Silva will announce Friday, April 21, that Brazil has become self sufficient in oil with a daily production of 1.9 million barrels per day.
Lula will officially activate oil rig P-50 in the Albacora Leste Campos basin, 120 kilometers offshore Rio de Janeiro with proven reserves of 500 million barrels of oil and 7.3 billion cubic meters of natural gas.
The new rig will increase Petrobras production by 13.4% in 2006 reaching the 1.91 million barrels per day needed to ensure Brazil’s consumption with some to spare. The rig cost US$ 634 million and will extract 180.000 bpd.
"Self sufficiency is an extremely unusual phenomenon nowadays," said Sergio Gabrielli, Petrobras CEO in an interview with daily Folha de S, Paulo, adding that Brazil this year will have an oil surplus account equivalent to US$ 3 billion reverting decades of deficits.
President Lula who is expected to announce his re-election bid in the coming weeks wants to make the achievement of oil self sufficiency a matter of national pride for Brazil and apparently a launching pad for his continued political aspirations. A massive television campaign costing over US$ 15 million is paving the way for the Friday announcement.
With oil at US$ 70 the barrel and possibly much higher in the coming weeks, "Brazil is achieving a strong defense against possible supply crisis or price speculations", said Adriano Pires, head of Brazil’s Infrastructure center.
Compared to 2004, oil production in the coming six years is expected to increase 54%, exports 190% and imports will contract 65%, according to Petrobras Business Planning Office.
Brazil’s oil industry gained momentum in the mid nineties with deregulation and the growing participation of the private sector. The decisive moment happened in 2003 with the discovery of large offshore deposits in the Campos basin.
"We’ve had a production boom. In 1997 when we opened the oil market to the private sector production was 0,865 million bpd. This year we’ll be above 1.8 million barrels, which means doubling production," said Mr. Pires.
However he also mentioned that other factors have influenced the achievement of the self sufficiency goal: "incredibly" low economic expansion rates and the growing demand for other alternative fuels such as alcohol and natural gas.
But Petrobras CEO Gabrielli cautioned that the fact "we are self sufficient does not mean oil prices in Brazil will be independent from those in the rest of the world."
Petrobras reports that Brazil has sufficient oil reserves for the next ten years and in the coming five will be spending US$ 500 million annually to consolidate production. By 2010, Brazil should have incorporated new wells representing an additional 1.5 million bpd.
Mercopress – www.mercopress.com
