Cameron Looks to Increase UK Oil Interests

By Andrew Willis, Contributing Reporter

RIO DE JANEIRO, BRAZIL – UK Prime Minister David Cameron used an official visit to Brazil last week to meet with Petrobras CEO Maria das Graças Silva Foster at the state-led oil company’s Rio de Janeiro headquarters. The visit underlines Brazil’s growing stature in the oil sector, despite recent shortfalls in meeting production targets.

Accompanied by a delegation of British businessmen, the British ambassador and minister for trade, the pair discussed possible business opportunities between UK industry and Petrobras, as well as a number of cooperative projects including university research work.

Cameron highlighted the capacity of British companies to work with Petrobras in helping to develop Brazil’s oil sector, thrown into the global spotlight in 2007 following the discovery of huge off-shore oil reserves, buried beneath the seabed under a thick layer of salt.

Petrobras’ chief Foster stressed the importance of ‘local content’ rules in Brazil’s oil sector, but stressed that, with so many projects under way, there was ample space for British Industry.

“We have huge potential in oil and gas, an enormous challenge ahead of us and a national sourcing policy, but we are still open to British goods and services,” Foster said.

Brazilian rules require oil sector projects to include up to 65 percent of Brazilian-made goods and services, a policy that analysts say is hampering the country’s oil production but also creating jobs on the domestic market.

“Brazil is a country where Britain has not taken advantage of opportunities in the past,” Cameron told the Folha de Sao Paulo newspaper, pointing out that Britain supplies only 1.5 percent of Brazilian imports compared with 6.4 percent by Germany.

Coinciding with Cameron’s visit, UK oil major BP announced plans to invest US$10 million in a research project that will involve three British and five Brazilian universities.

The aim of the project is to research the Parnaíba Basin formation in northeastern Brazil, using a combination of seismic and geological techniques. Brazilian firm OGX has already drilled a number of appraisal wells in the relatively unexplored onshore basin.

News reports in August suggested that BP is currently mulling the potential sale of its only oil producing field in Brazil – the Polvo field – in order to concentrate on its deepwater operations off Brazilian coast.

Also, British firm BG Group recently announced that it plans to increase its oil production in Brazil by a factor of twenty over the next eight years, from 30,000 barrels per day at present to 600,000 barrels per day in 2020.

New figures show that Petrobras’ oil production in August fell to 1.92 million barrels per day, its lowest level this year. Since February the company has failed to break the two million barrels per day barrier, a marked decline on 2011 when average daily production was 2.02 million barrels per day.

However a study by the Empresa de Pesquisa Energética (EPE) last week predicts that Brazil’s oil production is set to rise by 158 percent by 2021, compared to output in 2011.