The CEO Game

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.

Brazil’s economy is on the up and growing rapidly as the swift pace of the samba, the national icon: the investments are flowing in, the investors are enthusiastic, the market is getting stronger and the gap between rich and poor is closing gradually. The CEO Game launches a special series of articles about Brazil, one of the hottest countries in South America and a rising powerhouse in the global scene, in order to shed some light on this Latin wonder and answer why all investors are going crazy for Brazil?

The ninth economy in the world

In Brazil, the land of the samba, even rallies appear like a carnival: balloons in all sorts of colors are flown into the air, bands are playing to the beat of the drums and the protesters are making themselves heard through singing altogether. That’s just how the 50 thousand workers of the major banks of Brazil, looked like when they assembled to protest three weeks ago in front of the parliament in Brasilia, the capital. They requested to minimize the working week to 40 hours of work and to improve the labor conditions.

“Our economy is growing in the recent years, partially due to the oil, which is a national resource that belong to all the Brazilian people. It is not understandable why all the profit is going only to the investors and the rich. The workers, the ones who are behind the wheel, who put the wheels of the economy in motion, also are entitled to some of the wealth”, that’s the reason for the protest according to one of the protesters. This rally, which might seem trivial to the Western “eye”, says something about the new club that the Brazilian worker is gradually joining.

That worker, is no longer demanding work by itself, he wants privileges too. It is another symptom for the change that Brazil is undergoing in the last few years- millions of people who have gone from the poor layer of society to the middle class and are changing the face of the country. You can notice the change everywhere, from Sao Paulo, the largest city in Brazil and financial capital of it to Rio de Janeiro (the host of the 2016 Olympic Games), where each weekend thousands of Brazilians are swarming to Copa Cabana, the most prime and well known beach location in the city.

In the last few months, Brazil became the hottest name in the global economy. Approximately two weeks ago, the “Economist” magazine published that in five years, Brazil’s economy will become the fifth largest economy in the world, while surpassing France and the UK. This optimistic estimation lit a fire under this already hot potato and increased the buzz surrounding the country through the global markets.

Brazil is currently the ninth economy in the world in size and is one of the four countries who are lucky enough to be a part of “BRIC”, a term that refers to the fast-growing developing economies of Brazil, Russia, India, and China which are meant to be the fastest growing economies of 21st century. The acronym was first coined and prominently used by Goldman Sachs in 2001. In the twenty-one century, these four countries will consist 40% of the world population, while only 12% of the world population will live in the Western countries.

Brazil’s ace and uniqueness in this pack is its democracy which treats foreign investors gracefully and in dignity. Moreover, hosting the 2014 Mondial games and the 2016 Olympics and the 20$ billion that the government is expected to spend on these ventures will definitely and significantly increase the financial boom and is surely another reason for foreign investors to come a knockin’.

Omer Shachnai

The CEO Game.

Just two years prior to this decade’s end, the world was struck by the one of the biggest financial crises since 1929. But despite the moments of crisis and before our entrance to the second decade of the 21st century, we had witnessed many moment of success and technological invents that conquered the world. Now it is the time to go back and review the most influential financial events of the first decade in the millennium.

Euro- became the financial star of Europe

The aforementioned financial crisis will be our kick off point. The global financial crisis was the most significant event influence- wise. When the share folders began to lose their value in 2007, no one could have though that it was just the warning sign. But, when the American banks came tumbling down one after one in the United States, everybody already knew, that this was the beginning of global economic crisis. In 14 September 2008, the crisis had gone from bad to worse, when Lehman Brothers, the American investments bank declared bankruptcy. From this point and on, it was one event after the other, indices dropped percents by the hundreds and many people were left homeless. From the beginning of this year, we started to see many signs of recovery in the economy, President Obama’s people even found the time to claim it was over, but experts still insist this is not the end.

The golden age of the European Union: In 2002, Europe adopted the new Euro currency. The Euro is the common currency for sixteen out of twenty-seven countries who are members of the European Union. The newly born coin, replaced all the currencies which were used until then in those different countries. Just before the introduction of the Euro, the continent was swept by fears and sincere concerns, mainly due to the fact that not all of the countries were ready to receive the new currency. Nevertheless, hysteria became history, today- nearly 8 years after its introduction the Euro became the financial star of Europe.

Another major event, which was one of the crisis’s first sprouts was the oil barrel price which reached the price of 100$ for the first time in 24 years. At the time, experts connected the rise to another decline in the US oil reserves, the price reached its climax in July 2008, but since the financial crisis was officially declared, the prices dropped to the low price of 33$, the lowest price since July 2004. But enough with these “misfortunate” events, in the year 2000 the widely renowned “Disk On Key” was invented by an Israeli company named “EM-Systems” which was later bought by Sandisk for 1.5$ billion. The easy to use, Disk On-Key became one of the most popular accessories in the world. Later on in 2001, Microsoft released the operation system Windows XP, which had two different versions one for home use and one for the business sector both based on the same core, not that I am a huge fan, but it is worth mentioning.

YouTube’s huge deal: In February 2005, three workers of pay-pal, the online credit service, founded the world’s largest and biggest file sharing website, YouTube. In November that year, a sponsor was found and the site was born. Under-less than a year YouTube was bought by Google in one of the biggest deals in the field, when Google paid 1.65$ billion in shares for YouTube. It became so big that we can’t even imagine the web today without YouTube or other familiar sites.

The world’s second longest Oil pipeline which was built in 2006 is the first pipeline which is capable to deliver oil from Asia to Europe, not through Russia. The pipeline stretches over 1,770 kilometers and goes through the capital of Azerbaijan and Georgia, until it reaches Turkey. Oil this, Oil that, we personally take much more interest in the iPhone. In 2007, Apple announced on their new joy toy, the iPhone. The advanced device was one of the most sophisticated yet appealing devices which were invented this decade. It revolutionized the cellular market, and made the iTunes store and the App Store well famous. The iPhone is controlled by touch, and is considered one the biggest innovations in the field of private communication.

Britain’s big break came in the form of a nerdy boy who is a great magician. The science fiction book series of Harry Potter from J.K. Rolling became a huge success story. Million of books were sold all across the world, and with each release the sell record of the previous book was broken once again. Only in the US, the seventh and last book in the series, sold 8.3 million copies in the first 24 hours of its release alone. Microsoft’s Second Event came in 2007 when Microsoft released Windows Vista. A lot of good stuff was told about the operating system before the release, but soon it was clear that the joy was a bit too early. A little after the publication, the company declared on decreasing the price, but it didn’t make a lot of change. Today, the new Windows 7 seems to bring a fresher look and feel to Vista and could be a sign of success after that failure.

The End of the Beetles: In 2003 came the end of an era- the creation of the classical Beetle car was stopped, after 65 years of production. The car from the house of Volkswagen, was created first in 1938, misfortunately due to the request of Adolf Hitler. Over the years, twenty million cars were made, until 30 July 2003 when the curtain was finally closed on one the milestones in the history of the automobile industry. Another means of transportation which made history, and now became a part of history on its own is the Concord Plane. The plane came out of service in 24 October 2003 with a final retirement flight that year and while we are on the subject, let us mention the First Private Flight to Space: In 21 June 2004, Space Ship 1 had complete the first private trip to space with the experienced pilot Mike Melvill on board.

In conclusion it was a great decade in spite of the financial crisis, a decade which was full of wonderful inventions- many of whom we mentioned here, and still we barely scratched the surface.
Omer Shachnai

The CEO Game.