Already estimated to contain 50bn barrels, and with much of the area still to be fully explored, the fields contain the world’s largest known offshore oil deposits. In one step, Brazil could jump up the world rankings of national oil reserves and production, from 15th to fifth…
“This could be the largest private sector investment programme in the history of mankind – more than actually putting a man on the moon,” says Pedro Cordeiro of the Bain & Company consultancy in São Paulo. He estimates the total investment could be roughly equivalent to the annual gross domestic product of Australia. “Not counting new concessions, you will have $1,000bn of investment over the next 10 years. It’s huge.”
The article is interesting throughout. Ken Rogoff put it well: ““Brazil has everything that China doesn’t…”
For the pointer I thank Rohan Varavadekar, who also refers me to this article on hospital competition through billboards.
Rio politicians were fighting hard for the royalties last year. Everybody wants to catch Dutch disease.
Not to knock it–I mean, 50bn barrels is worth a ton of money–but shouldn’t the fact that it requires “the largest private sector investment…in the history of mankind” of over $1 trillion be counted as a cost, rather than a benefit? It makes me think of the “green jobs” style of argument (i.e. it makes me cringe).
$1,000 billion dollars of investment is only $20 dollars a barrel, and 50bn barrels are only what are already known, there is likely much more oil there.
What is the average investment cost per barrel of offshore oil in other parts of the world? That’s the only way to tell if this is a green jobs style boondoggle or if it’s just a huge number because there’s a huge amount of oil to be extracted.
Although 50bn barrels are expected to lie in the deposit, the cost of getting the last 25bn will be higher than the first. If history is any guide, I would also expect $1,000 billion to be low-balling.
Umm… what’s wrong with private sector investment? If the risk-takers think its worth the risk, they take it. How is this not good?
As the economy as boomed in Brazil, has there been any analysis showing if this is affecting where illegal immigrants are heading? Has this slowed the movement north to the U.S.? Are more heading to Brazil? There are still a lot of Brazilians heading to the U.S. if I’m not mistaken
That’s an interesting question that I often think about. I don’t think immigration changed here and it was really never that strong with other Latin american countries. One explanation, I believe, could be that despite bordering 10 SA countries Brazil’s largest cities (and economic centers) are thousands of miles away from the borders. Historically Brazil developed by the coastline and to the south – that’s far far away from the borders of the poorest countries (which are also the largest borders). I also think that the population of these countries is more concentrated near the Pacific than the Amazon. ( Check the Brazilian population density map: http://3.bp.blogspot.com/_RmjizkgwRV4/TGq_oEXSoVI/AAAAAAAAA6k/roiQndtmDHk/s1600/densidade-demografica-brasil.gif ). Quito, Bogotá, Caracas and two other SA capitals are actually closer to Miami rathar than Rio.
There’s more spatial integration with Argentina and Uruguay, but in fact thouse countries have higher GDP per capita than Brazil.
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Immigration of Brazilians to the US has fallen dramatically I believe. Besides the economic growth here and the US recession, the appreciation of the BRL towards the dollar (108% from 2002 to 2010, with inflation around 5% at the period) has made immigration much less worthy.
I live in the Boston suburbs that has a large Brazilian immigrant population and for several years large numbers have been returning.
I live in the Boston suburbs that has a large Brazilian population and for several years large numbers have been returning to Brazil.
Note the “could”s in the article.
This was news 3 years ago.
“Ken Rogoff put it well: ““Brazil has everything that China doesn’t…””
And vice versa?
“Brazil has everything that China doesn’t…”
How about a smart, hardworking and entrepreneurial population?
Based on his logic, Japan and Germany should be no more than middle income countries, while South Africa/Brazil/Nigeria should be the titans of world economy instead. And Israel shall be crushed by their Muslim neighbors.
What a silly statement!
I think that’s not the point. What Rogoff refers, I believe, is the well known complementarity between Brazilian and Chinese exports. China is a huge importer of Brazilian commodities (and viceversa)
Another BRIC puff piece? It’s surprising that Thomas Friedman did not write this one. At least FT dares to mention dutch disease.
Like democracy.
This is anecdotal, but my Brazilian wife knows a number of Brazilians who came here and are headed back to Brazil. Her friends and relatives in Brazil also think she is crazy to come to the US, because the economy is stronger there.
However, the attitude of Brazilian employers towards hiring immigrants vs. natives is very different from that of American employers. There are plenty of Brazilians for hire and they will get hired first in their country. That is why we think both of our employment prospects may actually be stronger in the U.S., despite the upturn in Brazil and the downturn here.
““Brazil has everything that China doesn’t…”
Except the rule of law.
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