Petrobras: U.S. Must Strengthen Energy Alliance with Brazil

Source:

"President Obama expressed interest in helping Petrobras develop massive reserves."

The United States must lend more importance to its strategic alliance with Brazil if it wants to benefit from state-controlled Petrobras' recently discovered deep-water oil and natural gas reserves in the Atlantic Ocean, the company's CEO, Jose Sergio Gabrielli, said.

The executive commented after U.S. President Barack Obama expressed interest in helping Petrobras develop those massive reserves during an official visit to Brazil on Saturday and Sunday.

If the U.S. government views oil imports from Brazil as strategically important, "it must create the conditions that attach importance to the strategic alliance.

According to Gabrielli, the United States can enhance that alliance by extending loans to Brazilian oil firms, offering incentives to U.S. companies interested in operating in Brazil and providing facilities for selling the Brazilian product in that country.

Gabrielli estimates that Rio de Janeiro-based company can double its proven oil reserves in a period of five years once the pre-salt deposits are declared commercially viable.

The Brazilian company's proven reserves currently total roughly 14 billion barrels but that figure does not include between 10-16 billion barrels that have been discovered in the pre-salt and will become proven reserves after a declaration of commerciality has been submitted to regulators.

Located in a roughly 160,000-sq.-kilometer (62,000-sq.-mile) offshore area, the pre-salt fields are estimated to contain roughly 80 billion barrels of oil equivalent and could potentially transform the South American nation into a major crude exporter.

But accessing them will be very costly and pose an enormous technical challenge because they are located at depths of between 5,000-7,000 meters (16,400-22,950 feet). Drastic changes in temperature as the oil is brought to the surface also add to the technical complexity of developing those fields.

Get Our Streetwise Reports Newsletter Free

A valid email address is required to subscribe