Brazilian Oil Industry to Underpin Real Estate Growth
With Brazil making the largest oil finds in the western hemisphere for the last 30 years, the wealth generated for the country will result in a huge redistribution of money, leading to sustained growth in the Brazilian property market.
The Brazilian Finance Minister is confident that Brazil will become an oil super power in the next ten years as projections show that the country will have crude for half a century and will become a top ten oil exporter and an important player in international geopolitics.
Finance Minister Edison stated that Brazil would be producing 3.6 million barrels a day by 2017. With domestic demand in Brazil projected at 2.6 million barrels, this would leave a substantial surplus for export. President Lula da Silvas government is also planning to invest heavily into the petrochemical sector, enabling it to sell not just unrefined crude but also lucrative oil derivatives.
Petrobras, the country’s leading manager of oil and gas exploration, has grown exponentially in the last 12 months in the wake of the continued oil finds. A recent survey by Ernst & Young ranked it as the worlds eighth biggest company in market value.
In 2008 Petrobras was valued at a highly-respectable $95.9 billion, placing it in 37th place in the global arena. However, the recent finds, coupled with major technology advances, have caused market value to almost double to $164.8 billion.
Yet another find was announced this month in Brazil’s Santos Basin. The find was made following the drilling of a fourth well in the BM-S-9 block off the south-eastern coast. This provided more good news for Petrobras as well as the British Gas group and Spanish-owned Repsol, who are working in conjunction with Petrobras to drill the block.
A find the previous week in the same region is estimated to hold between 1.2 billion to 2 billion barrels of oil and gas, although no projections are available with regard to the new find.
Petrobras will now concentrate its investment strategy on the domestic market, said Petrobras CEO Jose Sergio Gabrielli, who went on to explain that the primary objective now was not to continue investing overseas, but to ensure the effective development of all the recently-discovered offshore oil reserves.
President Lula da Silva’s plan to increase control over the energy industry through regulation is currently being debated by the Brazilian congress. The Governments proposal is that Petrobas will have the dominant role in all matters with regard to the petroleum industry in Brazil.
The Government will give Petrobas operator status for all the oil and gas finds and will serve as the commercial outlet for sales of all oil derivatives, both domestic and international. There are also plans to create another state-owned company called, Petrosal, to manage the Governments oil and gas assets. Analysts predict that this company could eventually grow larger than Petrobas.
Speaking this week, Petrobras CEO, Jose Sergio Gabrielli announced We are in a fantastic moment. Brazil is cementing its future as a leading oil superpower and the positive effects will be felt throughout the Brazilian economy.
This piece was written by Ginny Naish the Marketing Director of Property Dreams Brazil, a real estate consultancy based in Joao Pessoa, Paraiba. Property Dreams Brazil can provide consultancy services with regard to property investment, land, re-location and real estate marketing. Please visit Property Dreams Brazil for more information.
