New Oil in Brazil Unleashes a Gusher of Media Controversies

Twisted information about the discovery of what may possibly be the third largest oil field in the world turned into a hot issue on the Brazilian blogosphere this week. The trigger was a comment from the head of Brazil’s National Petroleum Agency [ANP], Haroldo Lima, mentioning that the recently found Carioca [or Sugar Loaf] field in Brazil’s offshore Santos Basin could potentially contain reserves of up to 33 billion barrels of oil and gas. The comment was amplified by the media as an official announcement, which caused a wave of excitement through investor markets from Brazil to New York for Petrobrás [Brazil’s state-run oil company] and its partners Repsol-YPF and the BG Group.

Petrobras officials quickly reacted saying that 3 months of further drilling would be needed before any meaningful estimate of volumes could be made. Yet, the day-after local media headlines took on the ‘announcement’ as a deliberate act to boost Brazilian markets and Petrobras’ share price, and speculated about the legal consequences the company could face for making such groundless comments. Meanwhile bloggers found a new gusher of opinions in the theme.

Haroldo Lima, director of National Petroleum Agency, has firmly denied having made any public announcement related to the Santos Basin’s find. He would have just made a comment based in articles published in a specialized American magazine. But the word of the director of a regulatory agency has weight not only over the sector regulated by it, but also over financial markets. Therefore it is not his role to make any inference. The weight of the word of an oil sector manager is much bigger than the opinion or an article of a journalist.
The weight of the word and the responsabilityLeandro Vieira

The media, which in its overwhelming majority is opposed to the president Luis Inacio da Silva, the “Lula”, has tried to characterize Haroldo Lima as irresponsible, and the oppositionist CVM (Securities and Exchange Commission) says it will “investigate” him for having shared information with the public before an official announcement from Petrobras. That was an evident demonstration of spite, envy and hatred from the Brazilian right against the President Lula. That’s what we can translate from the attempt to disqualify the remarks of Haroldo Lima — a respectable public Brazilian figure. In its sordid ways, the media has tried to sensationalize the context of Lima’s comments, which were made in a closed event, as if he had made an announcement in a public plaza with a megaphone, aiming to reach the whole population. In fact, the information about the Carioca field was already known by oil specialists, and it had already been reported in the US by the “World Oil Magazine”.
Media roars againstTribuna Petista

illustration

Lula: … tell Petrobras to make up another oil field,
so that I can get away from the latest scandals, heck!!!

The media hatred, which is infecting even members of the government, derives from the fact that Lima has revealed a big failure of the local press. Strategic information about our energy reserves, something hugely important, was circulating since February in the specialized media, and our local outlets were not aware of it. They were not reporting anything about it. What a colossal slip-up… The case of the mega-fields is emblematic. The right has become depressed about it! It has become depressed with the fact that Brazil has found oil! Now, it is depressed and revolted by the fact that ANP’s director has shared what the specialized media already knew, that there is a concrete possibility that the Sugar Loaf field contains more than 30 billion barrels and is the third biggest reserve on the planet.
In defense of Haroldo Lima: the media failedÓleo do Diabo

It looks like the left-right bickering has once again thwarted media accuracy in reporting important issues, and the blogs are speculating about the hidden agendas in this case. Once again you will find different scripts for the same plot depending on which blog you read, but it is good to mention that the man in case, ANP’s director Haroldo Lima, is an historic leader from the left who is particularly known for his activism — he was jailed and tortured by the regime’s political police from 1976 to 1979 — through the traumatic period of armed resistance and military dictatorship in Brazil.

On April 2006, the government wasted 40 million reais to announce that Brazil had started to produce more oil than it consumes. But the bragged-about self-sufficiency has not happened until now. Petrobrás’ production has stalled, the usage has increased and the short-fall of the oil’s commercial balance has started to grow once again. The red numbers in 2008 may reach 8 billion dollars. There were fireworks also last year, to announce the discovery of the Tupi mega-field. At the time, the government declared that the Brazilian reserves, that reach today 14 billion barrels, could add up to 22 billion barrels. But it is extremely early to say if or when those reserves will be in fact explored. Last week, some data related to Petrobras was again used to feed political pyrotechnics. Haroldo Lima, National Petroleum Agency’s [ANP] general director has declared that Petrobras found a mega-field at Santos Basin.
Governo mente sobre a PetrobrásBlog do Briguilino

It is possible that some speculators have made some money with the information that he [Haroldo Lima] has opened to the public. But these speculators would earn money one way or another. If the information turns out to be false, they will sell and win again. Haroldo Lima has no money or connections that would allow him to play at Bovespa [the Brazilian Stock Market]… Probably, almost certainly, Haroldo Lima’s goal was to denounce Petrobras’ contracts with foreign companies. This mega-field, which he called “Sugar Loaf”, it is not “ours” as it should be. Petrobras has only a 45% share along with the group of companies that will explore this field. The British BG has 30%, the Argentinian-Spanish Repsol has the remaining 25%. We should ask: why and for what Petrobras needs foreign resources for exploration and prospecting?
Helio Fernandes: Haroldo Lima, unsuspect and untouchableà ilharga de uma geógrafa (blog incidental)

The one new element that the oil-rich dreams have brought to the Brazilian political arena is the government resolution to change its set of rules for oil exploration and production. Although assuring international partners that there will be no change to the rules of the game already under way, Mines and Energy Minister Edison Lobao said on Thursday that “the government has to have better terms in the sharing of natural resources”. Indeed, the withdraw of subsalt blocks from last year’s annual auction of oil concessions was seen as a move to keep the most potentially productive areas out of foreign hands, and a local sign of a growing global trend of a so-called resource nationalism spurred by high oil prices.

With the discovery of this subsalt layer, called Carioca or Sugar Loaf, and of the other extraordinary reserves already identified, the exploratory risk has practically ended, and as Petrobras’ president Sergio Gabrielli has remarked, it has become a prized ticket. That was the reason why the government and the company has decided, in time, to withdraw from the 9th round of concessions the subsalt layer blocks, and the plan is to change the 1997 legal framework. As expected, private businesses and the media are making their moves against this approach, but the current reality formed by high international oil prices, the energetic crisis in South America and in the world, and mainly, the recent discovery of almost risk-free giant fields with high profitability, is indeed pushing a revision of the 1997 legislation.
Article from José DirceuBlog de um sem-mídia

In the original article [which generated the brouhaha], the author had a special interest in finding out the reason for the change of mind of the Brazilian oil managers concerning oil concessions and partnerships with foreign companies in the exploration of national reserves.

The article details the explorations developed at the Santos Basin, their position and depth, the possible extension of the field, which blocks of exploration it comprehends, as well as the characteristics of the oil already found… The last paragraph manifests the author’s opinion, his unease with the possible withdrawal of some key blocks from ANP’s 9th round of auctions, which he considers to be, maybe, the manifestation of the kind of “nationalism that some have predicted due to the decline of world oil reserves”. But he wraps up with what he considers to be the “real message of these discoveries” — “that we must not lose sight of the as-yet unknown, but possibly great, potential of basins that are often the exclusive domain of national oil companies”.
Petróleo de Carioca: o que dizem Haroldo Lima e a World OilVermelho

God is Brazilian,” Brazilian President Luiz Inacio Lula da Silva said in November in response to his government’s announcement that massive new oil reserves had been discovered offshore. Now, as might be expected, various interests are lining up to compete over who owns and benefits from this gift of God.

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