Brazil Oil Finds May End Reliance on Middle East, Zeihan Says

By Joe Carroll

April 24 (Bloomberg) -- Brazil's discoveries of what may be two of the world's three biggest oil finds in the past 30 years could help end the Western Hemisphere's reliance on Middle East crude, Strategic Forecasting Inc. said.

Saudi Arabia's influence as the biggest oil exporter would wane if the fields are as big as advertised, and China and India would become dominant buyers of Persian Gulf oil, said Peter Zeihan, vice president of analysis at Strategic Forecasting in Austin, Texas. Zeihan's firm, which consults for companies and governments around the world, was described in a 2001 Barron's article as ``the shadow CIA.''

Brazil may be pumping ``several million'' barrels of crude daily by 2020, vaulting the nation into the ranks of the world's seven biggest producers, Zeihan said in a telephone interview. The U.S. Navy's presence in the Persian Gulf and adjacent waters would be reduced, leaving the region exposed to more conflict, he said.

``We could see that world becoming a very violent one,'' said Zeihan, former chief of Middle East and East Asia analysis for Strategic Forecasting. ``If the United States isn't getting any crude from the Gulf, what benefit does it have in policing the Gulf anymore? All of the geopolitical flux that wracks that region regularly suddenly isn't our problem.''

Tupi and Carioca

Brazil's state-controlled Petroleo Brasileiro SA in November said the offshore Tupi field may hold 8 billion barrels of recoverable crude. Among discoveries in the past 30 years, only the 15-billion-barrel Kashagan field in Kazakhstan is larger.

Haroldo Lima, director of the country's oil agency, last week said another subsea field, Carioca, may have 33 billion barrels of oil. That would be the third biggest field in history, behind only the Ghawar field in Saudi Arabia and Burgan in Kuwait.

Analysts Mark Flannery of Credit Suisse Group and Gustavo Gattass of UBS AG challenge the estimate for Carioca. Lima, the Brazilian oil agency director, later attributed the figure to a magazine.

Flannery told clients during an April 16 conference call that 600 million barrels is a ``reasonable'' estimate and suggested Lima may have been referring to the entire geologic formation to which Carioca belongs.

Supply Boost

Carioca is one of seven fields identified so far in the BM- S-9 exploration area, part of a formation called Sugar Loaf.

If additional drilling by Petrobras, as Petroleo Brasileiro is known, confirms the Tupi and Carioca estimates, the fields together would contain enough oil to supply every refinery on the U.S. Gulf Coast for 15 years. Petrobras said it needs at least three months to determine how much crude Carioca may hold.

Zeihan said that beyond supply gains from Brazil, it will take a tripling of Canadian oil-sands output and greater fuel efficiency to end Western reliance on Middle East oil.

The U.S. imports about 10 million barrels of oil a day, or 66 percent of its needs, according to the Energy Department in Washington. Saudi Arabia was the second-largest supplier in January, behind Canada.

Persian Gulf nations accounted for 23 percent of U.S. imports, compared with Brazil's 1.7 percent share. Brazilian crude output rose 1.9 percent last year to 2.14 million barrels, according to the International Energy Agency.

``Hemispheric energy independence sounds a little pie-in- the-sky given that this hemisphere already is generating one- third of overall global demand,'' said Jason Gammel, an oil analyst at Macquarie Bank Ltd. in New York. ``It's pretty tough to talk about self-sufficiency unless we were to see food-based biofuels taking an even bigger role in the next five to 10 years than is already mandated.''

Offshore Fields

Zeihan predicts a 2012 start to production at Tupi. Technology needed to tap fields like Tupi, which sit hundreds of miles offshore beneath thousands of feet of rock, sand and salt, hasn't been developed, he said.

Petrobras, Chevron Corp., Royal Dutch Shell Plc and Norsk Hydro ASA plan to start pumping oil from eight Brazilian fields in the next 2 1/2 years that will produce a combined 1.02 million barrels a day, enough to supply two-thirds of the crude used by U.S. East Coast refineries.

More discoveries will follow in Brazil's offshore basins, most of which have yet to be opened to exploration, Zeihan said. Repsol YPF SA, Exxon Mobil Corp. and Devon Energy Corp. are among the producers scouring Brazil's waters for reserves.

``The finds they've got so far are just the tip of the iceberg,'' Zeihan said. ``Brazil is going to change the balance of the global oil markets, and Petrobras will become a geopolitical supermajor.''

To contact the reporter on this story: Joe Carroll in Chicago at


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Lets get the barrels coming in already! :angry:

Good news. This should help level off the dreaded peak in a few years.

It's still not enough. We need to get off all that shit from ME to Venezuela to Brazil.

I used to not think about this shit near as much as I have in the last couple of years. One reason being the hit in the wallet at the pump. But the other being most of you bastiges making the issue take a place in the forefront of my mind on the list of things I worry about that I have very little control over. Thanks fuckfaces.

Well then youd better get to bed, cause youve got to ride a bike to work.

The good thing about Brazilian oil is that they can sell most of what they pump. They fuel just about everything on wheels in that country with ethanol from sugar cane.

It's definately not enough to raise worldwide production. But if it will simply offset the decline from the rest of the world, it'll be a huge benefit.

It will give us more time to ramp up wind, solar, and nuclear power and electric vehicles here.

Ahhh Yes. More of the Almighty black Gold. I love it. We start drilling in Anwar, North dakota, montana and off the Gulf, we'll be able to say adios to all those not saluting the flag.

What scares me is that it will be used as an excuse to delay development of that technology.

I don't think that will be too much of a problem. All of this oil that is now economically feasible to extract can only remain economical with oil prices over $80/barrel. That's how much they have to sell this stuff for in order to turn a profit.

That's still double what oil was 3 years ago. And it's only going to go up as the North Sea, Russia, and Mexico have decline rates of over 4% per year and OPEC saying that they can' increase production. Mny anylist are predicting $200/barrle oil in the next 5 years.

So no matter what, oil is going to remain VERY expensive forever. Prices this high are what is driving the push for renewables. Not to mention the fact that burning oil pollutes the environment, so we have to stop sometime.

I hope you're right.

BTW, my next car is either a Prius or the new Acura TSX (when they come out with the diesel version).

Any thoughts on pros vs. cons of these (considering I'd LOVE an excuse to get the much nicer TSX, but could probably stand to go with the more economical Prius)?

I think it depends on how you'll use the car. For stop and go city driving, the Prius wins hands down, but for long sustained speed highway hauls, the diesel wins out.

Another thing to consider is that diesel is now considerably higher priced than gasoline. Mainly because China has increased their diesel imports something like 45% in just one year. So if diesel continues to gain price quicker than gasoline, it's a no brainer.

Also, within a year or 2 Toyota is supposed to bring the plug in Prius here with a 30 mile EV range. If you could get that, you could do a good chunk of your driving on pure electricity. Or you could get a current Prius and install an aftermarket kit to get ~30 miles of EV range when the warranty ran out.

I figured as much, and I'll probably go with the Prius because while most of my driving is "highway" driving, it's still stop and go in Atlanta. Only on my out of towners will I have sustained highway speeeds. I was really looking for an excuse to drop another $10 large on a nicer car, but my head says it doesn't make sense.

I'd LOVE the Prius PHEV, but they need to get it out next year, because that's my timeline. I'll need a new car by then. I probably won't do a PHEV add-on unless Toyota offers it with a warranty. At least not until the factory warranty expires....

wow

getting high on sugar

another idea

by8v68787 ;)