Brazil's oil industry will remain profitable even at current price levels, as enough oil production is ensured by the discovery of large oil deposits in Santos basin.
According to the Energy and Mines Minister of Brazil, Edison Lobao, the current and future oil production in Brazil is sufficient to make the industry profitable even at the present prices, as reported by Latin American Herald Tribune.
Brazil is expecting that the prices will stabilize somewhere between $60 and $70 per barrel by the end of 2009 against $52 per barrel for both the US and European benchmark on April 2, 2009. Moreover, the state-owned oil company Petrobras has recently announced a five-year investment plan worth $174 Billion till 2013, 55% higher than its earlier five-year plan which is due to end in 2012.
With the discovery of huge oil reserves in Santos basin, Brazil is marching fast on the way to emerge as one of the leading oil producers in the world. Thanks to the vast light crude oil reserves explored by Petrobras in the past 18 months in Brazil's offshore oil region "pre-salt", the country will be able to produce a large volume of oil in a short term.
At the time of Tupi discovery, oil prices were around US$ 100 per barrel, but since then, they have slumped drastically. However, with oil prices currently at around $50-$55 per barrel, the investors are expected to return. This is supported by the recent announcement Petrobras' strategic plan which was publically revealed in February 2008 and comprised extremely ambitious financial aims.
On the other side, the current economic scenario is posing serious threat to the development of oil field. Global recession, recent losses of currency-derivatives and the uncertainty about the value of Brazilian Real has increased the financial restrictions as well as curbed the risk taking attitude of the overseas investors.
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