Brazil's oil outlook is changing

Brazil Minister of Energy Dilma Roussef spoke at the Brazilian press conference at the Offshore Technology Conference May 5 in Houston. Roussef said Brazil still has problems with taxation and domestic content, but pointed out that the new administration is still in a transition period and is working on solutions.

Roussef also assured listeners that positive changes are underway in the Brazilian oil sector. Under a new administration led by President Luiz Inácio Lula Da Silva, the economy and oil sector have shown significant improvement. Roussef illustrated the improvements with the following statistics:

• Moody's and the Statdard and Poor's Institute cited the Brazil risk rating at 821 points, which is the lowest it's been in one year.
• Inflation had gone up to 2.25% in January, but dropped to 1.23% in March
• The dollar exchange jumped from $1 = Reais2.4 to R4 last year, but has been dropping steadily and is now at R2.91
• Exports have been booming, with trade surplus in 1Q 2003 reaching $7.6 billion. This is $2.5 billion over the surplus target set by the International Monetary Fund for that period
• Petrobras has lowered the price of gas and other oil products after the war in Iraq
• Domestic oil production continues to increase with self-sufficiency in sight.

The 5th E&P concession bids are scheduled for August. Recent discoveries of large gas and very light crude could encourage more bids.

05/05/03