Posted on 01/07/2014 6:35:36 AM PST by thackney
When fields said to hold billions of barrels of oil were discovered off the coast here, exuberant government officials said the deep-sea prize would turn Brazil into a major energy player.
More than six years later, the outlook for Brazil’s oil industry, much like the Brazilian economy itself, is more sobering. Oil production is stagnant, the state-controlled oil company, Petrobras, is hobbled by debt, and foreign oil companies are wary of investing here.
“It’s funny, a few years ago, everybody loved Brazil,” said Roger Tissot, a longtime consultant on Latin American energy. “And now it seems the love is gone.”
Brazil once saw itself as an up-and-coming oil power that would help meet the world’s demand, but it now faces a hard reality and might have to scale back its expectations, former energy officials, oil executives and advisers say.
The country’s deep-sea bonanza has suddenly become less alluring to big, rich oil companies. Other promising energy sources have emerged around the world, including fields in Africa, tar sands in Canada and shale gas deposits unlocked by hydraulic fracturing technology, also called fracking, in the United States.
“These companies have the financial muscle and engineering capacity and technologies to move around the world,” said Ramón Espinasa, an oil specialist at the Inter-American Development Bank in Washington. “They are able to pick and choose. And that explains why they are not in Brazil.”
Some oil experts say Brazilian energy planners, who spoke of unproven reserves that could rival those of some of the biggest oil powers, may have vastly oversold the deep-sea bounties, which are called “the pre-salt” because the oil is under a shifting cap of salt.
“There were a lot of government authorities saying the reserves of Brazil were 50 billion barrels, 100 billion barrels, even 240 billion barrels...
(Excerpt) Read more at washingtonpost.com ...
IOW: It is a country that should be a first World dominant nation, but Latin American Leftism and poor governance strands it in a second/third World existence
Socialism does that to business. If they take it all for themselves and won't let you make your investment back with some profit why invest?
Sounds like this century’s Brazil = last century’s Mexico and the oil execs know how that turned out.
I recently saw a TV show on Henry Ford and his Brazilian boondoggle was featured in the show. Most interesting way to pour money into a hole, most rich people did that with boats in Henry’s day.
From Wiki:
The government of Brazil was suspicious of any foreign investments, particularly in the northern Amazonian region, and offered little help. Ford tried again, relocating downstream to Belterra where better weather conditions to grow rubber existed, but by 1945 synthetic rubber had been developed, reducing world demand for natural rubber. Ford’s investment opportunity dried up overnight without producing any rubber for Ford’s tires, making Fordlândia a total disaster. In 1945, Henry Ford’s grandson Henry Ford II sold it for a loss of over US$20 million ($208 million 2013 dollars).
http://en.wikipedia.org/wiki/Fordl%C3%A2ndia
The Hugo virus.
I was down there in 2010 on a business trip. A buddy of mine and I were looking at buying a company down there until we realized their labor rates are higher than ours because of their cradle to grave Socialism. From what our host described their bureaucracy is worse than ours, too. Employers must match employee salaries 100%, paid to the gubmint to fund the employee’s social welfare. They lack infrastructure, too, primarily highways between their major cities. You see it when you fly in. You’ll see towns of say, 50,000- 100,000 with roads leading out of the city. About 8-10 miles out the roads just end. The only way to get around in Brazil is to fly. It’s a young, highly motivated society, though. Highly caffeinated, too. I think the lack of roads, the Socialism and the obstacles their government puts up to foreign investment are the three main culprits keeping Brazil in 3rd world territory. Otherwise, it’s a beautiful country and the people were very friendly. I was in Porto Allegre, down south, almost to Uruguay. That area was settled by Portuguese, German and Italian immigrants. Everywhere you looked were some of the most beautiful women I’ve ever seen. I mean real jaw-droppers. By contrast, the men were mostly short, fat and bald. Go figure!
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