September 25, 2008

WHENEVER THEY DO HAVE THE FOREIGN POLICY DEBATE...:

The Exception That Proves The Rule: How a state oil company succeeds—by not acting like one. (Robert Bryce, September 25, 2008, The American)

[A]t a time when most national oil companies—and most OPEC members—are seeing their output stagnate or decline, Petrobras, Brazil’s national oil company, is dramatically increasing its output.

And without that new Brazilian production, today’s oil prices would likely be higher. Between 1997 and 2007, Petrobras’s oil production doubled to about 2 million barrels per day. By 2015, the company expects its production to double again. At that level, Petrobras would be the undisputed energy superpower in the Western Hemisphere, with output almost twice that of national oil companies PDVSA of Venezuela or Mexico’s Pemex. And given its surging output, Brazil is reportedly interested in joining OPEC.

So how did Petrobras evolve into such a successful company while its fellow national oil companies have stalled? There are a number of reasons for its remarkable success, and most of them have to do with Petrobras’s embrace of capitalism and transparency. Now the world’s tenth-largest producer of liquid hydrocarbons, Petrobras has become an elite global energy player by doing what most other national oil companies refuse to do, including selling shares of the company to the public. And while many other big oil exporters, particularly within OPEC, either refuse to disclose their production data or publish fictitious numbers, Petrobras issues frequent press releases that discuss the latest developments within the company, including production trends, financial conditions, and new discoveries. And there have been plenty of new discoveries.

Last November, the company announced the discovery of the offshore Tupi field, a deposit that may hold 8 billion barrels of oil equivalent—one of the largest oil finds in decades. Since then, it has announced numerous smaller, but still significant, fields containing huge quantities of oil and gas. The Tupi discovery alone could make Brazil the 12th largest holder of oil reserves. (It currently ranks 17th.)

Those discoveries are remarkable when compared with the dismal results being reported by PDVSA and Pemex. Art Smith, a Houston-based energy investor and founder of Triple Double Advisors, an energy-focused investment fund, says that “Pemex and PDVSA don’t lack for available resources; they lack the intelligent allocation of capital and technical skill.”


...you'll be able to tell how out of touch the Beltway is with America's future by how little time they spend on Brazil, India, Indonesia, etc.

Posted by Orrin Judd at September 25, 2008 8:07 AM
blog comments powered by Disqus
« WHAT'S THE POINT OF LARGE INFRASTRUCTURE PROGRAMS...: | Main | MSSRs. BUFFETT, VOLCKER AND RUBIN SHOULD BE THERE TODAY TOO: »