Business | Oil & Gas
Brazil oil finds 'could end reliance on Middle East'
Brazil's discoveries of what may be two of the world's three biggest oil finds in the past 30 years could help end the Western Hemisphere's reliance on Middle East crude, Strategic Forecasting said.
- Bloomberg
- Published: 00:45 April 25, 2008
Sao Paolo: Brazil's discoveries of what may be two of the world's three biggest oil finds in the past 30 years could help end the Western Hemisphere's reliance on Middle East crude, Strategic Forecasting said.
Saudi Arabia's influence as the biggest oil exporter would wane if the fields are as big as advertised, and China and India would become dominant buyers of Gulf oil, said Peter Zeihan, vice-president of analysis at Strategic Forecasting in Austin, Texas.
Zeihan's firm, which consults for companies and governments around the world, was described in a 2001 Barron's article as "the shadow CIA".
Brazil may be pumping "several million" barrels of crude daily by 2020, vaulting the nation into the ranks of the world's seven biggest producers, Zeihan said.
Brazil's Petroleo Brasileiro in November said the offshore Tupi field may hold eight billion barrels of recoverable crude. Among discoveries in the past 30 years, only the 15-billion-barrel Kashagan field in Kazakhstan is larger.
Haroldo Lima, director of the country's oil agency, last week said another subsea field, Carioca, may have 33 billion barrels of oil. That would be the third biggest field in history, behind only the Ghawar field in Saudi Arabia and Burgan in Kuwait.
Analysts Mark Flannery of Credit Suisse Group and Gustavo Gattass of UBS challenge the estimate for Carioca. Lima, the Brazilian oil agency director, later attributed the figure to a magazine.
Flannery told clients during an April 16 conference call that 600 million barrels is a "reasonable" estimate and suggested Lima may have been referring to the entire geologic formation to which Carioca belongs.
Supply boost
Carioca is one of seven fields identified so far in the BM-S-9 exploration area, part of a formation called Sugar Loaf.
If additional drilling by Petrobras, as Petroleo Brasileiro is known, confirms the Tupi and Carioca estimates, the fields would contain enough oil to supply every refinery on the US Gulf Coast for 15 years. Petrobras said it needs at least three months to determine how much crude Carioca may hold.
Zeihan said that beyond supply gains from Brazil, it will take a tripling of Canadian oil-sands output and greater fuel efficiency to end Western reliance on Middle East oil.
The US imports about 10 million barrels of oil a day, or 66 per cent of its needs, according to the Energy Department in Washington. Saudi Arabia was the second-largest supplier in January, behind Canada.
Gulf nations accounted for 23 per cent of US imports, compared with Brazil's 1.7 per cent share. Brazilian crude output rose 1.9 per cent last year to 2.14 million barrels, according to the International Energy Agency.
"Hemispheric energy independence sounds a little pie-in-the-sky given that this hemisphere already is generating one-third of overall global demand," said Jason Gammel, an oil analyst at Macquarie Bank in New York. "It's pretty tough to talk about self-sufficiency unless we were to see food-based biofuels taking an even bigger role in the next five to 10 years than is already mandated."
Zeihan predicts a 2012 start to production at Tupi. Technology needed to tap fields like Tupi, which sit hundreds of miles offshore beneath thousands of feet of rock, sand and salt, has not been developed, he said.
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