Workers walk on a Petrobras offshore-oil platform last year near Angra dos Reis, Brazil..
(photo credit: AP)
Brazil, long proud of its push to develop renewable energy and wean itself off oil, has a bad case of fossil-fuel fever.
An enormous offshore field in territorial waters
- the biggest Western Hemisphere oil discovery in 30 years - has
Brazilians saying, "Drill, baby, drill," while environmentalists fear
the nation will take a big leap backward in its hunt for crude.
There has been virtually no public debate on the potential
environmental costs of retrieving the billions of barrels of oil, a
project one expert said will be as difficult as landing a man on the
"The government is whipping Brazil into a euphoria that this is
going to be a solution for all our societal problems," said Sergio
Leitao, director of public policies for Greenpeace
Brasil. "Brazil is
no longer seriously looking at alternatives."
Home to the bulk of the Amazon rain forest
for decades has developed alternative energy as an issue of national
security following severe energy shortages in the 1970s. It uses
hydroelectric power for more than 80 percent of its energy needs, is
the world's largest exporter of ethanol, and nine out of every 10 cars
sold in the nation can run on ethanol or a combination of ethanol and
A UN study found that in 2008, Brazil accounted for almost all
of Latin America's
renewable-energy investment, to the tune of $10.8
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But since the national oil company Petroleo
Brasileiro SA, or Petrobras, discovered the massive Tupi field off the
coast of Rio de Janeiro two years ago - estimated to hold five to eight
billion barrels - it is the development of oil fields that has gone
Thirty years ago, more than 85% of Brazil's oil came from foreign sources. Today, it is a net exporter.
There have been a series of other discoveries since Tupi - each
lying at least 185 kilometers offshore, more than 1.6 km. below the
ocean's surface and under another 4 km. of earth and salt. Estimates of
the entire area's recoverable oil range between 50 billion and 100
Brazilian President Luiz Inacio Lula da Silva hailed the finds
as the nation's future, a second declaration of independence and an
economic savior for 57 million Brazilians living in poverty - 30% of
the population. The military wants new submarines and jets to protect
the crude. Leftist groups want it all nationalized.
The enthusiasm is also fanned by Brazil's devotion to
Petrobras, routinely listed as one of the most-admired companies in
Founded in 1953 to fend off an economic crisis and dependency
on foreign oil, Petrobras has long embodied Brazilian nationalism and
the notion of shielding domestic wealth from foreigners - particularly
the United States and Europe.
In 2008, Brazil's total oil and natural-gas production was
nearly 2.3 million barrels per day. Petrobras was responsible for more
than 96% of it.
"Most Brazilians think of Petrobras like they think of their
soccer stars," said Eric Smith, an offshore oil expert at Tulane
University in New Orleans, who likened efforts to get at Brazil's oil
to a trip to the moon. "Try to find Americans who support Exxon like
Petrobras fattens government coffers with more than $30b. a year in taxes and royalties.
The company is led by Sergio Gabrielli, a bearded economics
professor-on-leave, who was jailed under the nation's military regime
for his political activities. He defends the company's environmental
"Our ethanol program, our biodiesel program is still there.
Petrobras is allocating $2.8 billion to develop our infrastructure and
production capacity for producing ethanol and biodiesel," Gabrielli
told The Associated Press at an economic forum in Rio this spring.
The company's record is not untarnished, however.
In January 2000, a pipeline spilled about 350,000 gallons of
crude into Rio's Guanabara Bay. Six months later, there was a spill at
a refinery near Curitiba in Brazil's South - one million gallons of oil
flooded two rivers. In March 2001, explosions on what was then the
company's biggest offshore platform killed 11 workers. The rig sank,
releasing more than 300,000 gallons of oil.
Petrobras quickly initiated a $4b. investment program to
prevent future disasters, and Gabrielli says Petrobras can safely
develop the difficult offshore fields.
Judy Dugan, a founder of OilWatchdog.org, cautions Brazilians against embracing an oil company as a national benefactor.
She said the track record of global oil companies shows none
"truly have the good of the citizenry first in mind. The oil business
creates corruption in many governments and large sources of political
influence for an oil company's benefit, not for the benefit of
Brazil's Senate recently opened an inquiry into corruption at
Petrobras. Opposition lawmakers say the company failed to pay more than
$2b. in taxes and that it overpays firms with ties to the Silva
Silva swears Brazil will not go the way of a Venezuela or Nigeria, where petro dollars routinely mix with politics.
Instead, he is pushing a version of the Norwegian model, working
to set up a government-controlled oil fund for social projects that he
argues would operate with transparency. The opposition, however, fears
giving the central government control of such a fund would give it
massive new political influence.
Leitao, of Greenpeace, wonders if the billions of dollars
needed to develop the offshore finds will be worth it should the price
of oil fall.
"At the beginning of the 20th century, we were the largest
producers of rubber in the world. People were lighting cigars with
money," he said. "But the hangover came quickly because the English
started producing rubber in Asia. The prices fell and our fortunes
"We're not looking at the lessons our own history has given us."
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