Brazil Reacts to Gulf Oil Disaster

By Jewellord T. Nem Singh, Contributing Reporter

RIO DE JANEIRO – Drilling rig Deepwater Horizon exploded in the Gulf of Mexico in April 20th, taking eleven lives, and continues to leaks 1,000 barrel per day. British Petroleum (BP), the main company leasing the oil rig, is in charge of the clean up, but the on-going efforts to control its possible spread towards the U.S. coastline seem insufficient.

U.S. Homeland Secretary Janet Napolitano in a press conference claims that the oil spill is of “national significance”. The leak is spreading and may reach as far as the coasts of Louisiana, further threatening wildlife and people living in the region.

The catastrophe has now gotten the full attention of the U.S. government, with federal, state and local resources being mobilized in support of the oil company’s response. BP is now implementing the ‘top hat’ dome strategy in its attempt to curtail the effects of the oil spill. Some experts say that it can match the Exxon Valdez oil spill in Alaska in 1989, which caused 11,000,000 gallons of leakage.

The oil industry is known for its negative environmental and social consequences, yet many countries still rely on the economic rewards. Brazil with its vast natural resources ranging from petroleum and natural gas, hydroelectric dams, to extractive minerals, is also moving towards a larger energy resource-based economy.

The oil leak raises questions as regards the preparedness of Brazil to exploit its recently discovered oil fields. The Minister of Environment, Izabella Teixeira met with the Secretary of State for the Environment Marilene Ramos on May 7th, to discuss preventive strategies for Brazil as regards oil extraction.

Experts from the Brazilian Navy, INEA, IBAMA and Petrobras attended the meeting. The challenge is that there seems to be few models to follow. With the exception of Chile, no Latin American country has successfully reduced its vulnerabilities both to international market fluctuations and environmental consequences through state management.

But Brazil is ready to go the extra mile to use its resources for energy security and economic development. With the discovery of new oil resources, the Lula government attempts to re-assert state control over resources by proposing the extraction of the new oil fields to be exclusive for state-owned company Petrobras.

There is also pressure for more strategic use of manpower to make Petrobras more competitive. The debates on royalty taxes and joint ventures for explorations are on-going and they seem to reflect the nationalist sentiments of developing capability to manage profits, production, and environmental consequences of oil extraction.

What is uniquely Brazilian is the historically constructed perception of the state as the driver of economic development, and its central idea of using natural resources as its engine. No other country has perceived its territory, water, and mining resources as important sources of economic prosperity than Brazil. Brazilians also look to the government to do the job, not the private sector.

Brazil is now expected to change its status from oil importer to exporter. Whether the oil leak will deter Brazil from pursuing this goal depends on how environmental consequences are factored in the calculation of costs in production.