Brazil Increasings its Role in the Global Oil Market

With oil prices reaching record highs, companies can afford to invest in new drilling technology, which has propelled new players into the forefront of the global oil market. Brazil recently announced finds of huge oil and natural gas reserves in the Atlantic Ocean. Previously, reserves in such isolated locations would be inaccessible, especially to countries such as Brazil.

A top Brazilian oil official recently announced that a deep-water exploration area off the coast of Rio de Janeiro could contain as much as 33 billion barrels of oil, although he cautioned the report was unofficial. A bloc that size would be the world’s third-largest known oil field and triple Brazil’s reserves. However, it is interesting to note that British Gas, LP and Repsol SA have 30% and 25% interests in the field, respectively. Petrobras, Brazil’s state-run oil company, only has a 45% interest in the field known as “Carioca.”

Just months earlier, Brazil announced that it discovered an 8 billion barrel oil field and a substantial find of natural gas in the Atlantic. In response to these discoveries, Brazil plans to spend $5 billion to develop the deep-water finds, setting the stage for Petrobras, which currently sits as the world’s sixth largest oil company, to become an even more powerful player in the global market.