Goat --
THis is old news. The Tupi field has been explored for several years now. It will go into production very soon if it isn't already. Chances are good I will be down there at the end of 2009, if not sooner.
Yes, even I had heard of this potential huge oil reserve off of Brazil's coastline before.
But I think the real "news" and why this story was in yesterday's L.A. Times' Business is that Brazil is now seriously considering nationalizing their entire oil production and locking big oil and other foreign oil companies out of the exploration and, by extension, the PROFITS.
I picked out the parts in the article which talked about Brazil taking over the entire production. Foreign oil companies (including U.S. big oil) have already invested billions of bucks helping Brazil get this far.
Now that it appears the oil reserves have been located, it looks like Brazil may be telling the foreign oil companies to take a hike because they now intend to do the rest themselves and keep all the profits. In 1997 Brazil opened Petrobras to part foreign ownership. (See last paragraph in quote below.) It now looks like Brazil may now be going back to wanting 100% ownership.
After investing billions in Brazil's Petrobras, the foreign oil companies, naturally, are not too pleased to now find out Petrobras may now tell foreign ownership adios.
Petrobras used to be 45% foreign owned. If Brazil now nationalizes Petrobras to make it 100% Brazilian-owned and decides to go it alone exploring their oil reserve, then will all the other foreign oil companies be locked out? Would your company still be working down in Brazil if foreign oil companies are no longer a part owner in Petrobras? I don't know the answer. Maybe previously signed exploratory leases (like your company must already have) will still be honored. But if Petrobras is the only company allowed to own this oil, it might put a whole new angle on it.
Maybe I'm interpreting it wrong but that's how it looks to me after reading these quotes in the article --
...But foreign oil companies, whose investments helped make the recent discoveries possible, have been spooked by the Brazilian government's threat to shut them out of future projects.
This month, the government may announce the formation of a national oil company that could own 100% of the deep-water reserves.
Expectations of such a development have caused a sell-off in shares of Petrobras, which has grown into the world's fourth-largest oil company in market value on the strength of Brazil's rising energy output over the last decade.
...
A key to Brazil's success has been its advanced exploration and drilling techniques that enable it to exploit once-inaccessible oil deposits one mile or more beneath the ocean floor. Just as important was the decision in 1997 to open Brazil to investment by foreign oil companies. Dozens now operate in the country, usually in partnership with Petrobras.
...
That's a big reason Petrobras this year said it was changing its investment strategy, pulling back from several oil projects in foreign countries to deploy more resources at home.
The government is expected to release a development plan by Tuesday. Officials at Petrobras, once a state monopoly and now 45% owned by private shareholders, declined several requests for interviews.
"It's very dangerous to change the rules of the game now," said David Zylbersztajn, an energy consultant and onetime president of the country's hydrocarbons agency ANP, which was formed in 1997 to break Petrobras' monopoly and attract investment....
