Brazil's status as net oil exporter raises new issues

In 2006, Brazil is set not only to achieve its decades-old dream of oil self-sufficiency, but should actually turn into a net exporter of crude. On 19 Dec 2005, Petrobras produced 1.86 million barrels of oil from its domestic fields, a figure already above Brazil's forecasted consumption of 1.85 million b/d in 2006. With 4 new offshore rigs coming on stream in 2006, average domestic output is set to jump to 1.91 million b/d. With another 10 platforms due to come onstream between 2007 and 2010, the firm aims to export at least 240,000 b/d of oil and oil products more than it imports.

Becoming an oil exporter should give Brazil's economy greater stability, economists say. In 2005, it rolled up a record trade surplus of $44.76 billion. Oil exports should increasingly support the trade accounts. Oil's weight in the economy is soon expected to reach 10% of gross domestic product. As an oil exporter, Brazil will also be shielded from possible inflationary shocks from rising oil prices.

But while self-sufficiency in oil is welcomed by nearly everyone in Brazil, becoming a net oil exporter stirs bitter criticism from an odd coalition of right-wing nationalists and leftist trade unions. Exporting oil is "an act of treason," reckons Heitor Manoel Pereira, president of the Association of Petrobras Engineers. "Brazil is no Saudi Arabia that can export as it wishes," Pereira said. According to specialists consulted by the association, oil prices will hit $100 a barrel in 2010, and continue to rise "astronomically" after that. Simultaneously, Brazil's oil reserves will decline rapidly, forcing the country to resume oil imports but at much higher prices.

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