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Latin America’s biggest economy, Brazil, is betting on vast offshore oil treasures to leapfrog ahead of the world’s top crude producers. But sometimes the obstacles seem too huge for the country to reach its ambitious targets. Meanwhile, the fuel-guzzling United States hopes that a friendly country like Brazil will help wean it off an unhealthy dependency on other, drama-prone oil suppliers. Will Brazil fit the bill?
For some, offshore oil treasures prove ‘God is Brazilian.’ For others, there could be a tall price to pay.
RIO DE JANEIRO, Brazil — The discovery of massive offshore crude oil reserves in 2007 was like a debutante party for this emerging South American power, longing to mingle with oil-rich peers in the Americas and the Middle East.
It “proves God is Brazilian,” then-President Luiz Inacio Lula da Silva said of the find. His successor, President Dilma Rousseff, called it the country’s “filet mignon.”
“What we had beforehand was neck meat,” she added.
Brazilians no doubt choose superlatives when it comes to oil. But reactions are mixed about offshore drilling. Many are hopeful about the economic growth prospects. But a small number of opponents are wary of potential harm to the environment — both via possible spills and contribution to climate change.
In November, a well 230 miles off Rio’s coast, operated by Chevron, began to leak. Chevron claimed that it only released an equivalent of about 3,000 barrels — nothing on the scale of the Deepwater Horizon explosion in 2007 in the Gulf of Mexico that killed 11 and spewed nearly 5 million barrels worth of oil.
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But some doubted Chevron’s tally. US environmental group SkyTruth said it used satellite images to measure the November spill off Rio’s coast, alleging it was 10 times the amount that Chevron counted.
The oil never reached Brazilian shores. Chevron released images of crabs seemingly copulating at the ocean floor site of the well leak in an attempt to show that marine life went on.
Yet it sparked an outcry among environmental groups and caught the eye of government prosecutors.
The American head of Chevron’s Brazil subsidiary, who surprised local journalists by speaking only in English, came across to some as dispassionately “gringo” in a news conference called to clarify the situation.
“I want to see the CEO of Chevron swim in that oil,” said the Rio de Janeiro State Environment Secretary Carlos Minc.
Prosecutors asked Chevron for more than 20 billion reais (about $10 billion) in damages, and a court ordered 17 foreign employees of Chevron and rig operator Transocean — the same firm involved in BP’s 2010 spill — to surrender their passports so they could not leave Brazil.
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Despite the incident, Brazilian officials never called for an end to the aggressive offshore and pre-salt drilling.
“In Brazil because of Petrobras and petroleum being considered a national good ... the debate over petroleum and the expanding industry is seen with a lot of optimistic patriotic pride,” says Carlos Bittencourt, a researcher with the Brazilian Institute of Social and Economic Analysis.
“Despite the great repercussion that the accident in the Gulf of Mexico had in the national media … this did not mark people’s collective imagination as an imminent risk for Brazil or even as a reason for caution.”
Instead, national discourse has focused on how to share the expected windfall from offshore oil.
Oil royalties, distributed in large part among state and city governments, have already spiraled as Brazil has expanded production over the past decade, from 3.9 billion reais (about $2 billion) in 2001 to more than 20 billion reais ($10 billion) in 2010. Rio state officials have campaigned hard to grow the state’s share.
Government officials are also criticized for exploiting environment worries.
“Unfortunately environmental concern has frequently been a motive for demagoguery” on behalf of state governments, says Sergio Bajay, a professor of mechanical engineering at the State University of Campinas in São Paulo and a former director of the National Department on Energy Policy of the Ministry of Mines and Energy. “It’s certainly worrying [to drill in the deep pre-salt reserves], but any time you raise the production of something, you raise the risks of accidents. Brazil is increasing the exploration of the pre-salt, so certainly the rate of accidents will go up.”
In addition to spills, environmentalists point to harmful gas emissions, such as carbon dioxide, that result from burning fossil fuels. Brazil is already the third most-polluting nation, behind the US and China, despite the fact that it is the world’s fifth-largest country in terms of population.
Consumption of petroleum originating from Brazil’s pre-salt wells will result in 35 billion metric tons of CO2 in the atmosphere over 40 years, according to environmental group Greenpeace. That’s more than the entire world emits each year right now.
“The ideal path would be to invest in another horizon of energy,” says Nilo D’avila, public policy coordinator with Greenpeace.
That will be big challenging. Zeal for oil has been a major driver not just for Brazil's economic growth, but also nationalist spirit. More than half a century ago, Petrobras was created under the banner “the petroleum is ours!”
“The case of Chevron shows that this petroleum is not so much ours,” D’avila says.
Now, with oil leaks making so many headlines, some Brazilians are unsure about the buried black gold.
Julio Cesar de Cruz, 52, dons Bermuda shorts and aviator sunglasses while selling beer and soda from a Rio beach hut he’s had for 22 years. He seems to flip-flop on the question of whether offshore drilling is a good thing.
“I am completely against extracting oil from the ocean,” he says. “But who am I to be against an industry of this size?”
What if there were a spill?
“We know one day it will happen," Cruz says, looking out at a nearby rig under repair in the Guanabara bay. "The money it brings in makes up for it. But there is a big risk. God knows what we'll do."
Beach-goer Elenilson Santos, 24, says he’s keeping the faith in oil companies, particularly Brazil’s Petrobras. “There is always a risk. But if it is produced in the right way, it is something we need. It's a benefit for Brazil. Brazil is making profit off of its territory."