Brazil President Luiz Inacio Lula da Silva says Brazil may become 3rd-largest oil producer.

Brazil’s offshore oil discoveries, including the Western Hemisphere’s largest since 1976, may push the country past the U.S. as the world’s third-largest crude producer, president Luiz Inacio Lula da Silva said.
“Brazil can become the world’s third-largest oil producer without putting on a turban,” Lula said today in Sao Paulo at a conference on social responsibility. By that, he said he meant Brazil can be a leading producer without giving up “its Brazilian ways.”

Brazil, which ranks second to Venezuela among South American oil-producing nations, would need to more than triple its 2007 output of 1.83 million barrels a day to surpass the U.S. average of 6.88 million, according to estimates by BP Plc. Saudi Arabia produced 10.4 million barrels of oil a day in 2007 and Russia pumped 9.98 million, London-based BP estimated.

Lula is counting on so-called pre-salt oil deposits in an area stretching 800 kilometers (500 miles) off the coast near Rio de Janeiro and Sao Paulo. Reservoirs beneath as much as 3,000 meters (9,840 feet) of water and 7,000 meters of seabed may contain 50 billion barrels of oil, according to Peter Wells, director of U.K. research firm Neftex Petroleum Consultants Ltd.

State-controlled Petroleo Brasileiro SA said in November that its Tupi field may hold 8 billion barrels of recoverable oil equivalent, the biggest discovery in the Americas since Mexico’s Cantarell field. Wells said his estimate for the pre- salt region was based on the expectation that there are four to seven similar prospects near Tupi.

Shipbuilding Plan

Lula, who took office in 2003, seeks to use rising oil production to benefit the broader economy, Latin America’s largest. That plan includes an effort to revive Brazil’s shipbuilding industry, once the world’s second-biggest. Petroleo Brasileiro plans to order 28 drilling rigs from Brazilian shipyards for delivery by 2017.

Brazil must also work to improve working conditions in its sugarcane industry by mechanizing production and ending the practice of using fire to prepare fields for harvest, Lula said. Fires are used to remove razor-sharp leaves that can injure field hands.

Lula said he’s working with business groups to achieve these goals and improve labor standards in the sugar industry.

Earlier this year ethanol surpassed gasoline as a vehicle fuel in Brazil, according to the country’s oil and biofuels regulator. Brazil is the world’s largest ethanol exporter.

Source: Bloomberg (www.bloomberg.com)


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