Yet another in the series of "X to the Rescue." It's not news that there's been a lot of hype--some of it warranted--about recent oil discoveries off the coast of Brazil. My goal here is not to explain how challenging these oil finds are (as in how many thousands of feet of sea water, rock, and salt deposits lie on top of the oil), how speculative the reserve estimates are, or how long it will take to bring these fields (such as the headliner "Tupi" field) online. Rather, my goal is just to compare PetroBras (Brazilian state oil company) statements about Tupi with Brazilian internal consumption:
PetroBras plans to start production from their Tupi field in 2009. They plan to produce up to 30,000 barrels per day that year, increasing to 100,000 barrels per day in 2010. It plans to order 28 new drilling rigs between 2013 and 2017, so presumably it plans to increase output over that period.
In 2007, Brazil was a net importer of crude oil, importing 30,000 barrels per day. Between 2006 and 2007, Brazil's internal consumption rose 90,000 barrels per day. Brazil's car sales were up over 24% in the first half of 2008, so there is at least some reason to think that internal oil consumption will keep rising as fast or faster than in the past. If Brazil's rise in internal consumption keeps pace with last year for 2008, 2009, and 2010, they will more than consume all the new oil from Tupi and related fields internally, and place increasing demands on the world export market.
I have little doubt that Tupi and other new Brazilian fields will be good for Brazil, but I think it is a mistake to think that they will significantly impact the world oil market over the next decade.