Oil nationalism

Latin America is a study in contrast of how countries manage their oil. In Mexico and Venezuela, state and oil industry live in a symbiosis flaunted as resource nationalism

By inviting private oil companies to bid for concessions, Brazil continues to buck a regional trend: Bolivia and Venezuela have confiscated private stakes in oil and gas production. Petrobras is also partly privatised, although the state retains a majority of voting shares.

Openness to the private sector is a wise choice. Tupi has been compared to the North Sea. The parallel goes beyond reserves: like the North Sea, the Brazilian offshore presents considerable technological challenges. The oil lies under thick sheets of rock and salt in waters thousands of metres deep. Not to want the best expertise in the world is hubris.

The world’s most successful state oil companies have been open to the private sector. Saudi Aramco was bought from private owners rather than founded ex nihilo to retain technological skills. Norway’s Statoil learnt in consortia of foreign oil companies before taking its first operatorships on North Sea fields.

Financial Times