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Brazil government discusses new oil company

Brazil government discusses new oil company

President Luiz Inacio Lula da Silva said Wednesday that Cabinet ministers are discussing the creation of a new state oil company to guarantee government control over Brazil's newly discovered offshore oil reserves.
The idea has already alarmed investors in the state-controlled oil company Petrobras and foreign partners who have seen the new discoveries as a potential bonanza.
Analysts estimate that recent finds could hold as much as 55 billion barrels of oil. If proven, that could transform Brazil into a major oil exporter.
The oil lies off the Rio de Janeiro coast, some 7,000 feet (2,000 meters) beneath the ocean surface and a further 5,000 meters (16,000 feet) below the ocean floor.
Silva told reporters during a visit to a natural gas plant in the northeastern state of Ceara that he was neither "for or against" creation of the new company, but created a committee of ministers "to develop a proposal we can debate with Brazilian society."
But Silva defended the idea of using profits from these reserves to improve the standard of living of poor Brazilians and invest in education.
"These reserves put Brazil in a privileged situation, with enormous possibility to spark a new cycle of growth that could last 10, 15 or more years so we can recover the decades when Brazil was stagnated and only generating unemployment," Silva said.
Since idea of the new company was floated at the end of May, share prices had slid sharply for Petroleos Brasileiro SA, a publicly traded company in which the government holds a controlling share.
"A new state-owned company would betray the investors in Petrobras, there are thousands of Brazilians who put their money into the company who won't see their investment grow if they are kept from these reserves," Sen. Eduardo Azeredo of the opposition Brazilian Social Democratic Party, told the Associated Press on Wednesday.
David Fleischer, a political science professor at the University of Brasilia, said the plans appeared to be very preliminary.
"The plan will have to be approved by Congress and it will take several years to generate any revenues," Fleischer said.
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Associated Press Writer Marco Sibaja contributed to this report from Brasilia.


Updated : 2021-05-18 09:23 GMT+08:00