Editorial: Brazil's Oil & Gas Journey - A Trip To The Moon?Add bookmark
"Three things cannot be long hidden: the sun, the moon, and the truth."- Siddhartha Gautama aka Buddha (563 BC – 483 BC)
Last Friday, Petrobras, Brazil’s energy giant and the largest company in the Southern Hemisphere, said that it would be raising oil and gas prices by 4 per cent and diesel prices by 8 per cent.
As of this morning, the company’s share price had plummeted 10 per cent, leaving stocks 27 per cent down on this time last year. The latest slump has been blamed on shareholder frustration at the lack of transparency with regards to price adjustments. However, recent events seem to belie a more deep-rooted malady.
Discoveries in the ultra-deepwater salt basins off the eastern coast of Brazil in 2007-8, promised to thrust Latin America’s most populous nation into the upper echelons of the oil producing world.
The country now stands as the world’s 12th biggest daily global producer and 15th in the list of proven oil reserves. Yet the last 24 months has seen $12.8 billion in losses for the paraestatal, and a production dip that is forecast to run into 2014. Petrobras’s 2013-2017 business plan hinges on divesting $9.9 billion in assets, including the sale of stakes in Gulf of Mexico blocs and exploration assets in Africa. Its recent deal to sell Petrobras Energia Peru to PetroChina for $2.6 billion is part of this strategy.
So what has gone wrong in the engine room of the "B" in BRICS? The reality is that the shale revolution in North America and the possible re-emergence of Iran in the world oil markets have dealt a blow to all aspiring petroleum exporting countries, especially those that have to traverse kilometres of sea water and then burrow through rock and salt dome to get at the Black Blood of the Earth.
In 2008 we were told that Brazil would spend up to $1 trillion on its offshore dream: "more than actually putting a man on the moon."
The truth is, the rocket may never get there…
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