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  • Brazil Becomes the 4th Largest Producer of Oil

    2010 - 05.14

    The Brazilian government is planning to increase Petrobra’s capital so the oil giant can finance a $220 billion plan to increase drilling and improve production and distribution through 2014.

    Brazil’s Lower House approved a bill in March that will exchange the rights to oil reserves for shares in the company and gave the Senate 45 days to consider the proposal. At present as lawmakers squabble over how much their States will get from future production; investors are waiting for details on where the oil rights will be.

    After the discovery of the Tupi field in 2007, Petrobras has become even more important to the Brazilian government. Early estimates from the company suggest that the Tupi fields may contain as much as 8 billion barrels of oil and gas that is trapped beneath 2km of salt.

    According to London based BP Brazil ranks as the 13th largest oil producer but if Tupi and Brazil’s other smaller finds contain as much as Petrobras is saying then they would make Brazil the fourth largest producer behind Saudi Arabia, Russia and the US.

    The TCU’s Aguiar says the court will continue to do its job and investigate Petrobras’s contracts.

    “We cannot condone companies or people who misappropriate or misuse public funds,” Aguiar, 68, says, speaking from his office overlooking Brasilia’s Square of the Three Powers. “We’d be stimulating fraud and the waste of our own money.” He added.

    As the government prepares for the 2014 World Cup and the 2016 Olympics in Rio, conflicts with the TCU are bound to worsen. According to the organising committee the Olympics will need at least $11 billion in investments. Already Lula’s PAC programme has committed a staggering 70% of that total for the Olympics. To help fund that Lula wants to remove government oversight and environmental screening that would slow projects for the sports events.

    “We need to create some accord or code of conduct among the control agencies and the executing agencies in the government so that we don’t give the same treatment to these events — be it on the financial audits, or the environmental issues, or the internal controls, or at the TCU,” he said.

    Saving the Amazon is not just about the trees and for environmentalists of whom I like to count myself among this is one step to far for Lula. He has already weakened Brazil’s environmental agency Ibama by removing some of its power to review giant hydroelectric power dams (such as the Belo Monte Dam). Now he risks ruining his legacy by bulldozing ahead with Brazil’s growth spurt.

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