MercoPress. South Atlantic News Agency

Brazil celebrates Friday oil self sufficiency

Brazilian president Luiz Inacio Lula da Silva will announce Friday that the country has become self sufficient in oil with a daily production of 1.9 million barrels per day.

On Friday Lula da Silva will officially activate oil rig P-50 in the Albacora Leste Campos basin, 120 kilometres offshore Rio Do Janeiro with proven reserves of 500 million barrels of oil and 7.3 billion cubic metres of natural gas.

The new rig will increase Petrobras production by 13.4% in 2006 reaching the 1.91 million barrels per day needed to ensure Brazil's consumption. The rig cost 634 million US dollars and will extract 180.000 bpd.

"Self sufficiency is an extremely unusual phenomenon nowadays" said Sergio Gabrielli, Petrobras CEO in an interview with Folha do Sao Paulo adding that Brazil this year will have an oil surplus account equivalent to 3 billion US dollars reverting decades of deficits.

President Lula who is expected to announce his re-election bid in the coming weeks wants to make the achievement of oil self sufficiency a matter of national pride for Brazil and apparently a launching pad for his continued political aspirations. A massive television campaign costing over 15 million US dollars is paving the way for the Friday announcement.

With oil at 70 US dollars the barrel and possibly much higher in the coming weeks, "Brazil is achieving a strong defense against possible supply crisis or price speculations", said Adriano Pires, head of Brazil's Infrastructure Centre.

Compared to 2004, oil production in the coming six years is expected to increase 54%, exports 190% and imports will contract 65%, according to Petrobras Business Planning Office.

Brazil's oil industry gained momentum in the mid nineties with deregulation and the growing participation of the private sector. The decisive moment happened in 2003 with the discovery of large offshore deposits in the Campos basin.

"We've had a production boom. In 1997 when we opened the oil market to the private sector production was 0,865 million bpd. This year we'll be above 1.8 million barrels, which means doubling production", said Mr. Pires.

However he also mentioned that other factors have influenced the achievement of the self sufficiency goal: "incredibly" low economic expansion rates and the growing demand for other alternative fuels such as alcohol and natural gas.

But Petrobras CEO Gabrielli cautioned that the fact "we are self sufficient does not mean oil prices in Brazil will be independent from those in the rest of the world".

Petrobras reports that Brazil has sufficient oil reserves for the next ten years and in the coming five will be spending 500 million US dollars annually to consolidate production. By 2010 Brazil should have incorporated new wells representing an additional 1.5 million bpd.