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| 'God's gift' to Brazil? | 'God's gift' to Brazil? |
| (about 4 hours later) | |
| By Gary Duffy BBC News, Tupi oil field, off the Brazilian coast | By Gary Duffy BBC News, Tupi oil field, off the Brazilian coast |
| Advertisement | Advertisement |
| Extracting oil 7,000m below the sea | Extracting oil 7,000m below the sea |
| On board a platform ship in the Tupi oil field, the sound of surplus gas being burnt overhead makes a deafening noise, the huge flame boosting the heat of an already uncomfortably hot day. | On board a platform ship in the Tupi oil field, the sound of surplus gas being burnt overhead makes a deafening noise, the huge flame boosting the heat of an already uncomfortably hot day. |
| Tupi made headlines around the world when it emerged that Brazil's state run oil company Petrobras believed it could contain five to eight billion barrels of oil. | Tupi made headlines around the world when it emerged that Brazil's state run oil company Petrobras believed it could contain five to eight billion barrels of oil. |
| The field lies in what all Brazilians now know as the 'pre-salt area' - so called because the oil and gas is to be found beneath several thousand metres of water, rock and salt. | The field lies in what all Brazilians now know as the 'pre-salt area' - so called because the oil and gas is to be found beneath several thousand metres of water, rock and salt. |
| To get it out is a not insignificant technical headache, and tests are continuing on board this platform, the Cidade de Sao Vicente, which is reached by travelling an hour and a quarter by helicopter from the city of Rio de Janeiro. | To get it out is a not insignificant technical headache, and tests are continuing on board this platform, the Cidade de Sao Vicente, which is reached by travelling an hour and a quarter by helicopter from the city of Rio de Janeiro. |
| Despite the challenges, Rivadavia de Freitas of Petrobras says they are very confident. | |
| "The deeper we have to drill, the more complicated it is," he says. "And in terms of that we are very happy as we are, day after day, getting better results and getting even deeper. | "The deeper we have to drill, the more complicated it is," he says. "And in terms of that we are very happy as we are, day after day, getting better results and getting even deeper. |
| Mr de Freitas says the platform is getting better results every day | |
| "On this platform we are doing what we call the well extended test - in other words gathering critical information, the data we have to have to develop in an economical way the oil production over this huge area in ultra deep water. | "On this platform we are doing what we call the well extended test - in other words gathering critical information, the data we have to have to develop in an economical way the oil production over this huge area in ultra deep water. |
| "The pre-salt area, as we call it, is absolutely the new frontier in terms of oil production for the whole country" | "The pre-salt area, as we call it, is absolutely the new frontier in terms of oil production for the whole country" |
| 'Veto power' | 'Veto power' |
| By 2017, Petrobras says the Tupi field could be producing one million barrels a day. | By 2017, Petrobras says the Tupi field could be producing one million barrels a day. |
| But while Petrobras and its existing international partners face challenges offshore, Brazilian lawmakers are currently debating legislation that would give the state a greater say over management of new oil fields. | But while Petrobras and its existing international partners face challenges offshore, Brazilian lawmakers are currently debating legislation that would give the state a greater say over management of new oil fields. |
| Petrobras would be the lead operator in any new ventures, and Petrosal, a new state controlled company with veto powers over issues such as the rate of oil production, would oversee the process. | Petrobras would be the lead operator in any new ventures, and Petrosal, a new state controlled company with veto powers over issues such as the rate of oil production, would oversee the process. |
| Oil industry analyst Francois Moreau says this level of state control raises some uncomfortable questions for foreign investors. | Oil industry analyst Francois Moreau says this level of state control raises some uncomfortable questions for foreign investors. |
| "Who is going to be the operator? Petrobras is going to be the operator of these joint ventures," he told the BBC News website. | "Who is going to be the operator? Petrobras is going to be the operator of these joint ventures," he told the BBC News website. |
| "It is a production sharing agreement, so the issue is how well protected is the income of the foreign investor? | "It is a production sharing agreement, so the issue is how well protected is the income of the foreign investor? |
| Petrobras says the Tupi oil field could hold five to eight billion barrels of oil | Petrobras says the Tupi oil field could hold five to eight billion barrels of oil |
| "Will he have veto power in the same way that Petrobras and the government will have? At the end they are not going to be in the driving seat. They will not have the capacity at the end to get real grip and influence on the bottom line issues." | "Will he have veto power in the same way that Petrobras and the government will have? At the end they are not going to be in the driving seat. They will not have the capacity at the end to get real grip and influence on the bottom line issues." |
| However, he adds this qualification. | However, he adds this qualification. |
| "If, somehow, Petrobras and the government guarantees them a decent return, they are going to be ok," he says. | "If, somehow, Petrobras and the government guarantees them a decent return, they are going to be ok," he says. |
| "You have to bear in mind, what is the situation in other countries? What are the real alternatives? They are not very encouraging - investing in countries where the rule of the law is being replaced by the law of the ruler. | "You have to bear in mind, what is the situation in other countries? What are the real alternatives? They are not very encouraging - investing in countries where the rule of the law is being replaced by the law of the ruler. |
| "Or countries that have demonstrated political instability. | "Or countries that have demonstrated political instability. |
| "So clearly Brazil stands out as a very promising opportunity, but it has learned, along with China, to firstly take most of the cake." | "So clearly Brazil stands out as a very promising opportunity, but it has learned, along with China, to firstly take most of the cake." |
| 'God is Brazilian' | 'God is Brazilian' |
| Petrobras also insists there is enough room for international investors. Jose Alberto Bucheb is a senior manager with the company. | Petrobras also insists there is enough room for international investors. Jose Alberto Bucheb is a senior manager with the company. |
| "The rate of success associated with the potential volumes is very attractive for international companies," he says. | "The rate of success associated with the potential volumes is very attractive for international companies," he says. |
| "And all of them, the main international companies, they work in this environment - in countries in which production sharing agreements are adopted. | "And all of them, the main international companies, they work in this environment - in countries in which production sharing agreements are adopted. |
| "Taken together with the political and economic stability of Brazil, all these variables result in a very attractive environment for investors." | "Taken together with the political and economic stability of Brazil, all these variables result in a very attractive environment for investors." |
| Mr Bucheb says Brazil is very attractive to foreign investors | Mr Bucheb says Brazil is very attractive to foreign investors |
| He says from the point view of achieving the government's objectives, the changes made sense. | He says from the point view of achieving the government's objectives, the changes made sense. |
| "The government wants to have more control over the rhythm of exploration, development and production. | "The government wants to have more control over the rhythm of exploration, development and production. |
| "Every country which wants to have more control over the production of petroleum has adopted production sharing agreements, because they are more suited to this goal. Brazil is doing exactly the same at this point." | "Every country which wants to have more control over the production of petroleum has adopted production sharing agreements, because they are more suited to this goal. Brazil is doing exactly the same at this point." |
| The pre-salt region stretches for hundreds of kilometres along Brazil's coast. | The pre-salt region stretches for hundreds of kilometres along Brazil's coast. |
| So far, official estimates in just three fields point to a potential yield of around 14 billion barrels of oil. | So far, official estimates in just three fields point to a potential yield of around 14 billion barrels of oil. |
| However, according to senior minister and presidential hopeful Dilma Rousseff, the entire region could contain between 25 to 100 billion barrels of oil. It is, she says, strong evidence that "God is Brazilian". | However, according to senior minister and presidential hopeful Dilma Rousseff, the entire region could contain between 25 to 100 billion barrels of oil. It is, she says, strong evidence that "God is Brazilian". |
| As if to test the theory, Petrobras is now said to be considering exploring even further north along the coast. | As if to test the theory, Petrobras is now said to be considering exploring even further north along the coast. |