After discussing Brazil’s communications and how the Olympics would boost Brazil’s communications, we continue to cover the story behind Brazil’s rocking economy: This time the focus is on one of Brazil’s biggest national resources- oil.
If you ask experts where is Brazil’s biggest treasure hidden, they would probably answer- a couple of kilometers offshore, east to Rio’s golden beaches, in the deep waters of the Atlantic Ocean; and what might it be? The black gold of course. Two years ago, huge deposits of oil and natural gas were discovered there, making Brazil one of the key oil producers in the world. This revelation came a year after Brazilian president Lula announced that Brazil is not going to be reliant on oil importation anymore, after it supplied nearly 70% of Brazil’s needs.
Fueling Brazil's economy.
From the offices of Petrobras, the national oil company, you can see one of the finest views in Rio- Sugarloaf Mountain, which is a part of a ridge of mountains that form the city’s beautiful bays. Behind the thick glass windows you can find the company’s CEOs working hard on development and expansion plans for the next years, which most companies can only dream of. In the past year, Petrobras had raised bonds totaling 32$ billion and in the upcoming decade they plan to purchase some 300 ships and other sea vessels while the whole world seems to be suffering from a crisis in the shipping industry.
Petrobras controls the oil business from A to Z: from production of oil and alternative energies, to running the refineries and finally selling fuel in gas stations. The company, the 2nd largest in the world in its field, is traded in a total of 200$ billion. Today the company is making 2 million barrels of oil equivalent per day and until 2020 they promise to double that amount. They also plan to triple the production of natural gas. Talk about ambitions.
A big part of the company’s agenda is devoted to creating green and alternative energies, such as ethanol, which is a natural fuel that can be made out of sugar canes. Petrobras plans to invest 4$ billion in the close years on research and development and moreover to spend 2.8$ billion on bio-diesel. At the same time, the company plans to increase ethanol fuel production times four. This fuel, is meant to decrease the pollution of carbon, but there is some controversy surrounding if it is really environment friendly (cost effective in Brazil), since the vast areas of land which are used in the south for growing the sugar canes, cause land prices to rise, hence pushing all other farmers north to the Amazon- which increases the destruction of the rain forest.
The “green gas” continues to be an important part of the Brazilian driver’s daily routine. This is the only country in the world where fuel consumption and ethanol consumption are almost equal: 49% of the cars consume fuel, while 51% consume ethanol. Wow. In 95% of the cars there is an option to increase the amount of ethanol at the expense of the regular fuel. Each day the drivers compare the prices and then decide which to consume more.
Despite this abundance of energy, oil prices will continue to swing and remain unstable for the next few years. Although oil consumption will decrease due to the usage of alternative energies, there is still going to be a need to increase oil production because of the natural rise in the amount of consumers. Also, the president of Petrobras has predicted that the world’s daily oil production- 85 million barrels per day, will multiply itself by 2030 in order to meet these demands.
In conclusion, if companies like Petrobras in particular and Brazil in general fulfill their plans, Brazil will become the biggest energy powerhouse in the world after Saudi Arabia, all while leading a change in green energy production and consumption.
More on Brazil: Focus on Brazil, Focus on Brazil: Only Second to the US, Focus on Brazil: The Olympics to Boost Communications, Will the Olympics be a Financial Success Story part one and two.
Omer Shachnai.
The CEO Game.
December 22nd, 2009 at 4:03 pm
[...] more from the original source: Focus on Brazil: It's in the Oil | The CEO Game Share [...]
December 22nd, 2009 at 9:44 pm
[...] the original post: Focus on Brazil: It's in the Oil | The CEO Game Share and [...]
December 23rd, 2009 at 2:18 pm
Francisco Ebeling of the Brazilian Institute of Oil, Gas and Biofuels explains the true significance of offshore pre-salt oil discoveries
http://www.alternativelatininvestor.com/commodities.php