What it means for the economy
In recent years, the global economy has been noticeably affected by the pressure on the world’s largest oil producers to keep up with the ever-increasing demand of fuel supply. While countries such as Iran and Mexico struggle to remain exporters, the 2007 discovery of oil in the Santos Basin off the coast of South America, 170-300 miles from Rio de Janeiro, may turn Brazil into the world’s largest oil supplier and lead it to joining OPEC. The Santos Basin contains what may be two of the world’s three biggest oil finds in the past 30 years: the Tupi and Carioca oil fields. In November of 2007 Petrobras said the offshore Tupi field may contain 8 billion barrels of recoverable crude and in April of 2008 it was announced that Carioca might contain 33 billion barrels of oil (official reports have yet to confirm this claim). In mid-June 2008 BG Group Plc, the U.K.’s third-largest oil and gas company, and Brazil’s state-controlled Petroleo Brasileiro SA made another discovery in Brazil’s Santos Basin called Guara. It is still under debate whether or not Guara is part of the Carioca field, however it certainly proves that the Santos Basin contains vast amounts of untapped crude. In February of 2008 Petroleo Brasileiro SA announced the important discovery of the Jupiter field containing natural gas. According to Strategic Forecasting Inc., these fields could help end the Western Hemisphere’s reliance on Middle East’s crude. Petrobras has a 65 percent operating stake in the Tupi field, Britain’s BG Group PLC holds 25 percent, and Petroleos de Portugal holds the remaining 10 percent. Currently, Brazil’s proven oil reserves are 11.8 billion barrels, less than half of the U.S.’s 21.8 billion. These new finds could potentially surpass the total amount of U.S. reserves. The new oil discoveries have caused the market value of Petrobras to increase to $297 billion, making it the third largest company in Latin America after ExxonMobil and GE and putting it ahead of technology giant Microsoft and the Shell company. Petrobras plans to invest about $33.5 billion in projects this year to increase production and explore the offshore fields. The proposed venture be the world’s largest investment program in the oil and gas industry, followed by OAO Gazprom, which has allocated $30 billion, and Royal Dutch Shell Plc with $27 billion.
A massive endeavor
Although Tupi promises to secure Brazil’s position as a major exporter, Petrobras must first take on the difficult task of turning the oil field into major production field. Analysts forecast that Tupi could cost upwards of $20 billion to develop. The field lies approximately 4.5 miles (7.2 kilometers) below the ocean’s surface. In order to reach it Petrobras will have to go through 7,000 feet (2,100 meters) of water and then drill through up to 17,000 feet of sand, rock, and then a massive salt layer that extends across hundreds of miles. Petrobras is building new refineries (in addition to its already existing nine) in Rio Grande do Norte and Maranhao that are scheduled to begin operations in 2010 and 2014. The company estimates that it will spend $8.6 billion on reducing sulfur at its refineries. The most advanced project Petrobras is scheduled to undertake is the Abreu e Lima refinery which is being built near Recife, the capital of Pernambuco state. Petrobras is also constructing the Rio de Janeiro Petrochemical Complex, or Comperj, at a predicted cost of $8 billion. The company also plans to invest in units that will expand its production of heavy crude oil into diesel.
Looking towards the future
Oil companies are positive that there are more oil fields to be discovered in Brazil’s offshore basin. Repsol YPF SA, Exxon Mobil Corp. and Devon Energy Corp. are among the producers searching Brazil’s waters for reserves. Over the next 2 ½ years drilling companies Petrobras, Chevron Corp., Royal Dutch Shell Plc, and Norsk Hydo ASA will pump oil from Brazil’s eight fields. Analysts predict that efforts will produce a combined 1.02 million barrels a day. Rigs used to drill in the Santos Basin cost $600,000 a day to operate and Petrobras has already signed contracts to purchase or lease 47. Texas companies including Transocean (RIG) and its merger partner Global Santa Fe (GSF), Noble Corp. (NE), Diamond Offshore Drilling (DO), and Pride International (PDE) operate these rigs. The oil boom has created hundreds of new jobs for these companies including design engineers, field service engineers, public and government relations positions, accountants, analysts, consultants, training specialists, project and marketing directors, technicians, hydraulics crew, drilling superintendents, asset development managers, and more. On June 18, 2008 Norwegian company Aker Solutions announced that it has officially opened Brazil’s only manufacturing centre for deepwater marine drilling risers located in Rio das Ostras. With the opening of the new manufacturing base for drilling risers, Aker Solutions has created a further 60 jobs in addition to 130 positions already filled.
Petrobras plans to add 14,000 engineers, geologists, and drillers within the next three years as it develops the giant crude oil discovery. The company plans to expand its workforce 23 percent to about 74,000, surpassing Chevron Corp., the second-largest U.S. oil producer. The hiring surge is part of a $112.7 billion expansion that may allow Brazil to overtake the output of all OPEC members except Saudi Arabia. The company is attempting to hire more than a dozen people a day amid intensifying competition for skilled oil workers after crude prices rose to a record. Exxon Mobil, Royal Dutch Shell Plc, and Saudi Arabia’s state oil company also are accelerating hiring as more oil production moves into Brazil’s deep ocean and harsh environment that requires more advanced technology. California-based Chevron, one of 13 companies exploring the Atlantic seabed off Brazil’s coast, employed 65,000 people at the end of 2007. Exxon Mobil had 80,800. Petrobras intends to recruit all of its new employees from Brazilian universities and technical schools.
The Booming Business and You: Relocation to Brazil
The ongoing discovery and production of oil in the Santos Basin will bring a plethora of businesses looking to relocate in Rio de Janeiro. Rent in Rio provides luxury and affordable long term leases in and around Rio. Many of their apartments are situated near the coast and downtown; convenient locations for those involved in Brazil’s booming oil industry. They have apartments in Sao Paulo for those looking to be near executive offices and headquarters. Also available are leases in Niteroi, a beautiful city located a mere 8 miles from Rio de Janeiro. Rent in Rio aims to make company relocations not simply a business move but also an enjoyable, comfortable, and memorable experience. All of their apartments are equipped with luxury amenities such as air conditioning, high-speed internet, and top quality maid service that is expected of your company’s expenses. Many of Rent in Rio’s luxury apartments come with stunning ocean and city views and we also offer penthouse apartments with gorgeous rooftop pools. The agents at Rent in Rio understand the stress of relocation and therefore take on the task of assisting their customers in every aspect of the transition. Upon arrival, clients are provided with a course on staying safe in Rio de Janeiro. Also available (depending on arrival date) are guided tours of the city. Rent in Rio also offers clients and their families the opportunity to take Portuguese language courses. If you are relocating to Rio to take part in the exciting, fast paced industry of Brazilian oil, allow Rent in Rio to assist you in making your new city feel like home. Call their offices today. 877-289-7543.
By Jennifer L. Bunin
Tags: brazil, brazilian economy, Carioca, Chevron Corp., Maranhao, Norsk Hydo ASA, oil, OPEC, petrobras, Petroleo Brasileiro SA, Petroleos de Portugal, relocation, Rent in Rio, rentals, rio de janeiro, Rio Grande do Norte, Royal Dutch Shell Plc, santos basin, Tupi