New Rig Brings Brazil Oil Self-Sufficiency

The Associated Press
Friday, April 21, 2006; 8:25 PM

RIO DE JANEIRO, Brazil -- President Luiz Inacio Lula da Silva, dressed in an orange jump suit, drenched his hand in oil as he flipped the switch Friday on a new oil rig that will usher in overall independence from foreign oil.

The start of production at the P-50 rig off Brazil's south Atlantic coast puts Brazil on track to produce as much oil as it consumes.

Silva showed off his oily hand to a crowd on the rig, a gesture imitating President Getulio Vargas when he created the government-run oil company Petroleo Brasileiro SA, or Petrobras, in the early 1950s.

The production milestone _ coordinated to fall on a national holiday honoring 18th-century independence hero Tiradentes _ marked an end to decades of dependence on foreign oil and fuel bills that plunged Brazil into debt when oil prices soared in the 1970s.

"It's an extraordinary achievement, a privilege only a few countries have," Silva said in a ceremony Saturday evening in Rio de Janeiro.

Petrobras said the huge P-50 rig will boost national oil production to an average of 1.9 million barrels a day this year, more than average consumption of 1.85 million barrels a day.

"It's an important date for the country, and Petrobras has every right to be proud," said Luiz Broad, an oil analyst at the Agora Senior brokerage in Rio de Janeiro.

As more offshore rigs come online, Petrobras expects to join the world's net oil exporters, with production exceeding demand by nearly 300,000 barrels a day in 2010.

Brazil still has to import light crude oil for the refined products it needs. The country produces _ and exports _ mostly heavy crude oil, which has to be mixed with the light oil in refineries.

The net-exporter status will boost Brazil's trade surplus and help shield the country from oil-price shocks. Petrobras said it won't pass on the spikes in international oil prices to Brazilian consumers. Oil prices reached a record $73 a barrel on Tuesday

It's quite a change from the 1970s, when Brazil imported 85 percent of the oil it consumed, deepening a foreign debt that raised inflation to four digits and pushed the country to the brink of bankruptcy.

"We have the fastest-growing oil industry in the world," Petrobras Chief Executive Sergio Gabrielli said Thursday.

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