Profile of an Oil Producer: Brazil

The largest and most populous country in South America, Brazil boasts more than just beautiful beaches and beautiful people, though it does have its fair share of both. Notwithstanding large disparities in income levels and high crime rates, Brazil stands as South America’s leading economic power, supported by its new and challenging role as a major player in the world of oil.
There is no doubt that the discovery of the Tupi oil fields and other oil resources has made Brazil the next big thing in the oil markets. Petrobras, the country’s state-controlled oil company, controls almost all crude oil production in Brazil and has become something of a darling in the oil world. Even though the discovered oil is stuck below more than 3 miles beneath the earth’s oceans and surface, the sheer volume of the fields has global oil companies chomping at the bit.

“Brazil has a lot of oil, and that alone is a reason a lot of people such as direct investors and portfolio investors and oil consuming countries like China see Brazil in a serious oil producer and exporter,” Sergio Torres, an analyst with JP Morgan in New York, told the Christian Science Monitor.

Simply put, Brazil’s oil discoveries put them on the global map. While the country is largely self-sufficient in its energy needs – it’s producing just about as much as it consumes – other emerging powers have a hungry appetite for Brazil’s new product. China, in particular, is consuming oil at a rapidly increasing rate. As China’s economy explodes and it becomes a major player on the world stage, it needs more and more oil, and Brazil is suddenly an option—an oil power outside of OPEC and, like China, vying for a leading role on the world stage.

Brazil’s place in the global oil markets has yet to be determined. While they are sitting on a “black goldmine” of oil reserves, the discovery will mean nothing if the costs of getting to it are too great.

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