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THE RUSH FOR OIL IN BRAZIL

Romantically, I'd love to report that Equal Exchange's Fairtrade Marked Organic Brazil Nut Oil is opening vast economic development opportunities -- "Dream on, Lou" -- but the truth is that Brazil seems to be entering a new era of fossil fuel fever.

"... since the national oil company Petroleo Brasileiro SA, or Petrobras, discovered the massive Tupi field off the coast of Rio de Janeiro two years ago — estimated to hold 5 to 8 billion barrels — it is the development of oil fields that has gone into overdrive. ... Estimates of the entire area's recoverable oil range between 50 billion and 100 billion barrels.

Brazilian President Luiz Inacio Lula da Silva hailed the finds as the nation's future, a second declaration of independence and an economic saviour for 57 million Brazilians living in poverty — 30 per cent of the population. The military wants new submarines and jets to protect the crude. Leftist groups want it all nationalized.

The enthusiasm is also fanned by Brazil's devotion to Petrobras, routinely listed as one of the most-admired companies in national polls."

Despite the many pioneering Petrobras efforts to employ the "latest-and-greatest" technologies of "clean and green" oil exploration and extraction deep plumbing for petrol remains a difficult, dirty and dangerous enterprise:

The oil workers union, the Federacao Unica dos Petroleiros, says Petrobras’s safety record is hardly pristine. The union says it has documented 282 fatalities among Petrobras staff and contract workers during the past 15 years in accidents at oil rigs and refineries.

Petrobras has also suffered 27 oil rig blowouts since 1980, two of them in the past 10 years, according to a presentation by Otto Luiz Alcantara Santos, a trainer from the International Association of Drilling Contractors.

In 2007, it took six weeks to plug a leaking well on land near the Espirito Santo Basin on Brazil’s eastern coast. The leak was finally plugged via a relief well of the kind being drilled in the Gulf, says Santos, who trains Petrobras staff in well control.

The most recent offshore blowout was in 2009 and was caused by an explosion in an offshore well in the Sergipe Basin. No one was killed, and Petrobras was able to plug the well in just two days by injecting fluids into the piping that remained after the explosion -- a technique that failed in the Gulf.

Has BP's Deepwater Horizon Gulf Gusher had an impact on the Brazilian oil rush?

Bloomberg reports:

Lucia Rodriguez Ilaria figured it would be easy to get a big crowd together in Brazil’s largest city to demonstrate against BP Plc, the company responsible for the largest oil spill in U.S. history. The June 12 event in Sao Paulo was part of Worldwide Protest BP Day, an event organized in 52 cities across five continents that aimed to start a boycott of BP products. About 350,000 people signed on for the protest on Facebook.

In Sao Paulo, eight people showed up for the rally at Ibirapuera Park, Bloomberg Markets reports in its September issue.

“I don’t think they’ll care until there’s a wake-up call, like if it happened off the coast of Rio de Janeiro tomorrow,” says Rodriguez, 26, a translator and organizer of the Sao Paulo event.

[UPDATE - 11 August 2010 - Bloomberg: Mysterious oil slick is appearing on beaches east of Rio.]

Indeed, the main controversy seems to center on how to divide the new wealth.

Last year, Lula introduced legislation, which has yet to pass, that would make Petrobras the operator of all new pre-salt oil fields and reduce the role of foreign companies to financial investors in projects in which Petrobras calls the shots.

Meanwhile, local politicians are fighting over how to divide up what they hope will be tens of billions of dollars in future revenues from the oil fields. All Brazilian states share royalties whether they produce oil or not. In early March, the lower house passed a bill that would increase the royalties for non-oil-producing states by as much as 26 percent.

More than 80,000 people filled downtown Rio on March 17 on a rainy afternoon to protest the bill. Rio de Janeiro state, which produces 68 percent of the country’s oil and natural gas, has the most to lose from any changes in the royalty structure. Further action on the bill has been delayed until after the October presidential elections.

Given the public enthusiasm for Petrobras’s deep-water projects -- or at least the money they’ll bring in -- it’s hard to find a politician who doesn’t back more drilling. Carlos Brizola, a Brazilian lower-house representative who led a committee this year that wrote a bill establishing new oil laws boosting government control of the industry, says there’s “no chance” Brazil will impose an Obama-style moratorium.