The Socialists in Brazil are doing their best to scare foreign investment away from Brazil so that Brazilians are never allowed to participate in the global economy. Hopefully Brazil won't join the ranks of Russia and Venezuela: Brazil Pumps First Pre-Salt Oil Amid Windfall Debate.
Sept. 2 (Bloomberg) -- Brazilian President Luiz Inacio Lula da Silva boarded an oil platform today to celebrate the first output from offshore deposits he's counting on to speed development and end poverty.
The oil is the first trickle from the so-called pre-salt region containing as much as 50 billion barrels of oil worth $6 trillion at current prices. Located in area is Tupi, the largest discovery in the Americas since 1976. Petroleo Brasileiro SA, the state-controlled oil company, is tapping the well about 560 kilometers (350 miles) northeast of Rio de Janeiro.
Although full-scale production is still years away, Lula's allies in congress are already writing bills to spend the windfall on programs ranging from education to nuclear submarines. Other lawmakers want to revamp Brazil's oil industry to exert more state control and limit foreign involvement. As the fight for cash intensifies, analysts and opposition lawmakers say it may scare off investment.
``We are cooking the omelets with eggs that the hen hasn't laid,'' said congressman Luiz Paulo Vellozo, who heads an opposition panel discussing pre-salt. ``We should not be discussing how to spend the money, but how to get the oil out.'' ...
Petrobras has the most at stake in the regulatory fight. The company has evolved into the world's 11th-largest company with a market value of more than $205 billion, about half the value of Exxon Mobil Corp., the world's the world's largest company, under the decade-old system of oil rights auctions.
``The paradox is that the discovery of pre-salt is the successful culmination of the same model now under threat,'' Carlos Langoni, a former central bank president, said at an Aug. 29 conference in Rio de Janeiro to discuss the new oil laws.
Since July 9, when the price of oil reached a record, the company's shares have tumbled 16 percent to 33.55 reais at 9:10 a.m. in Sao Paulo, almost double the decline in both the Sao Paulo stock market and the New York Stock Exchange Energy Index. The shares are now trading at the lowest levels since before the discovery of Tupi in November.