Brazil sets sights on increasing oil production

Brazil will at least triple its oil reserves by exploring the new Tupi offshore area, and will use the future revenues on healthcare and education, according to Brazilian President Luiz Ignacio Lula da Silva.

Eric Watkins
Senior Correspondent

LOS ANGELES, June 29 -- Brazil will at least triple its oil reserves by exploring the new Tupi offshore area, and will use the future revenues on healthcare and education for the country, according to Brazilian President Luiz Ignacio Lula da Silva.

"This is very promising for Brazil. We have to take advantage of this oil to develop the country," Lula told Bloomberg Television. "It's a chance for the Brazilian poor to use this money as opposed to having people with a lot of oil and three or four watches and a Rolex in their pockets. We want to take advantage of these riches to ensure that Brazil can take a great leap forward."

The Brazilian president avoided estimating the exact amount of petroleum that will be produced in the areas recently discovered by state oil concern Petroleo Brasileiro SA (Petrobras). Asked whether there was a possibility of tripling the current volume of production, he said, "There must be more than that, but I don't have the exact figure because there would be a lot of speculation in the stock market."

Concerning the methods that the government will use to explore the new Brazilian discoveries, Lula said, "That is a state secret." He said only that exploration of the Tupi well in the Santos Basin would take place in March. "We are going as deep as possible; we are working even more intensively."

Lula said he has changed his mind and won't seek membership for Brazil in the Organization of Petroleum Exporting Countries. "I'm under no illusion that Brazil will join OPEC," he said. "I used to be, but am no longer."

Instead, Lula expressed confidence in his country's transformation into a major producer of petroleum and exporter of petroleum products.

"I cannot discuss the size of the reserves, but I feel that Brazil is going to be transformed into a major producer. I do not want it to become an exporter of petroleum," he said. "I want Brazil to export petroleum products."

No reason for high oil price
Meanwhile, according to Lula, there is no reason for the successive rises in the price of oil. "Petroleum does not need to cost what it does; half that amount would be fine," he said.

He pointed out that the experts attribute the higher price of petroleum to several things such as rising consumption in China or the increasing use of reserves in the US. "But we are aware that the price does not need to be what it is."

In Lula's opinion, governments need to consider the impact of petroleum costs on food production, citing the cost of fertilizer and transportation. "I believe that the world will realize the irresponsibility of this point in time because of both petroleum and food," he said.

In Lula's opinion, the stand by US Democratic presidential hopeful Barack Obama against purchasing Brazilian ethanol and John McCain's stand in favor of it are just part of an election strategy. "When they take office," he said, "they will begin working in terms of reality."

In fact, Lula is convinced that Brazilian ethanol will be used in the US regardless of who wins the upcoming presidential election. "Whoever wins the election there will realize that it is cheaper, generates more employment, guarantees more peace, and creates no conflict with food production."

"I'm convinced that whoever wins the election will start using ethanol made from sugarcane," Lula said.

Contact Eric Watkins at hippalus@yahoo.com.

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