The risk-taking is emblematic of Petrobras, which decades ago decided to focus not just on developing domestic sources of oil but also on foreign projects as a means of hedging its energy bets.
The initiative dates from the early 1970s, when Brazil, dependent on oil imports for two- thirds of its energy, got clobbered by the global oil shock. Soon after, the country mandated a conversion to ethanol as an alternative fuel for cars, and now motorists fill their tanks with more sugar-based alcohol than gasoline.
Petrobras recently announced that it would invest $115 billion in projects at home and abroad through 2012, with 10% going to foreign projects. Worldwide, the company has 11.5 billion barrels of proven reserves. But if Tupi pans out, reserves could increase by 50% or more, though it will take four or five years for production at Tupi to begin.
The international strategy is in sharp contrast to the region's other state-owned giants, Venezuela's PDVSA and Mexico's Pemex. In recent years each cash cow has been milked by their governments to fund government programs, leaving little left over for investment in oil exploration and new technology.
Although revenue is increasing thanks to the rise in oil prices worldwide, production is in decline or treading water in Venezuela, Mexico and Ecuador.
Meanwhile, Petrobras' oil output has risen to 2.2 million barrels a day from half that a decade ago. The growth trend is expected to continue. The International Energy Agency in Paris projects that Brazil will add more new production in 2008 than any other non-OPEC nation.
"If you compare Petrobras with other Latin oil companies, it is by far the most dynamic and efficient," said Ricardo Amorim, emerging markets specialist with the West LB investment bank in New York.
Foreign oil projects like Guando now provide 10% of Petrobras' output, but the share soon could increase. A recent find in Nigeria could add another 100,000 barrels a day to the company's international oil output, said Decio Oddone da Costa, executive manager of Petrobras' southern cone operations, in a recent interview at the company's headquarters in Rio de Janeiro.
Petrobras is also a player in oil exploration off the U.S. Gulf Coast, where it installed the industry's first floating drilling platform. Unknown to many in the industry is that Petrobras has 356 employees at its U.S. headquarters in Houston. It is producing only 20,000 barrels a day in the Gulf but has hopes of more. It has leased 388 offshore sites from the U.S. government where it may drill.
