Brazil President Wants Oil Money to Fight Poverty and Improve Education

Lula and Gabrielli Brazil's President, Luiz Inácio Lula da Silva, used event in Vitória, capital of the Brazilian southeastern state of EspÀ­rito Santo, to mark the beginning of production of oil in the pre-salt layer and to defend the use of future Brazilian oil industry revenues to develop other sectors of the economy.

"We must make use of the opportunity to industrialize the country, to spread possibilities," he said.

In this respect, he pointed out that Petrobras is going to need at least 200 ships and 80 exploration probes over the next 10 years, at the cost of US$ 700 million each, and that the company must decide to produce them in Brazil, generating technology and income.

According to Lula, the company could even pay less for vessels made abroad, but it is necessary to think about the contribution the company could make for the domestic industry.

He also pointed out that the Brazilian pre-salt oil, especially that of the great reserves discovered in Santos Basin, should be refined in Brazil and exported in the form of high-quality oil products, adding value to Brazilian produce. The president pointed out that oil revenues must be used to fight poverty and "to pay the debt with Brazilian education, so ignored in the last century."

In the same lines, chief of staff Dilma Roussef added that "oil is what we can do with it," including the development of the industries that produce naval and oil exploration, production and refining equipment.

Lula and his ministers said that the concern of the country should be use of pre-salt revenues to guarantee distribution of riches and the future of new generations. "The challenge of a ruler is to complete his term leaving a legacy of collective improvement in people's quality of life," said the president of Brazil. "The large must continue winning and the small must make use of the opportunity to climb one or two rungs in the social ladder," he said.

The government of Brazil has established an inter-ministerial committee to decide on the legal format for exploration of the pre-salt oil in Santos Basin. The committee should present its report by the end of the month. In Jubarte field, in Campos Basin, where production began yesterday, the rights already belong to Petrobras.

The president did not hold back on praising his term in office, saying that in over 500 years of history of Brazil he doubts that "anyone had the opportunity to live what we are living today." Lula pointed out economic stability, control of the foreign debt, perspectives for long-term growth, forecasted investment in the public and private sectors in coming years, the "privilege" of partnerships and good relations with the 27 state governors, which, according to him, did not take place with his predecessors.

He pointed out that if the mortgage crisis in the United States had taken place 10 years ago, "Brazil would have gone broke," but that the solidity of the economy has made the country live the storm without greater consequences. Lula also pointed out that public and private investment in different sectors in Brazil by 2012 should total 1.2 trillion Brazilian reais (US$ 843 billion), and 2 trillion reais (US$ 1.2 trillion) by 2017.

In a good mood, Lula made several jokes during his address. Regarding the great depth of the pre-salt reserves – in Tupi they are at around 6,000 meters depth and in Jubarte, at around 4,500 meters – he said that "we are going so deep that soon Petrobras will bring a Japanese citizen back on the drill and cause an international incident." He added that he has been so lucky during his term in office that he believes that "God came by and decided to stay."

On commenting the meeting he had with Petrobras president José Sérgio Gabrielli, and with the company's exploration and production director, Guilherme Estrella, when he was informed of the potential of the Tupi field (reserves of 5 billion to 8 billion barrels), he said that up to that moment "the only salt I knew was the one used in my food." "Is it because of the pre-salt that sea water is salty? I thought it was because of people peeing in the seawater on weekends," he joked.

Jokes aside, Lula said that the first well in Tupi field should be producing oil on a large scale in one year's time. "Sovereignty will be even greater for those who come after us," he said. Jubarte field has a production capacity of 18,000 barrels a day.

He greatly praised Petrobras and guaranteed that the company should continue playing a fundamental part in exploration of the pre-salt layer, despite the new legal model being different to that applied to the areas above the salt layer. "We only have one mother, and Petrobras is the mother of Brazilian industrialization," he said. "The president at Petrobras should be chosen by direct vote, and he should then select the president of Brazil," he joked.

Other participants in the ceremony, like ministers Dilma and Edson Lobão (Mines and Energy), the governor of Espí­rito Santo, Paulo Hartung, and the president at Petrobras, referred to the start of production in the pre-salt layer on the coast of the state as a historic moment for the country. The idea is for the well located in Jubarte to serve as a school for the development of grater reserves located further south, in Santos Basin.

Hartung said that the regulatory agency, which has been in operation for 10 years and ended Petrobras' monopoly in the sector, opening the sector to foreign companies and guaranteeing the payment of royalties to states, was revolutionary, having expanded participation of the oil industry in the country's GDP from 3% to 10%.

He, however, defended changes in regulations regarding the new discoveries so that Brazilians as a whole may be benefited, not just some states. The governor also defended a formula to expand participation of the Union in oil, the strengthening of Petrobras and also a way for producer states to be benefited with new refineries.

Dilma recalled author Monteiro Lobato, a defender of nationalization of oil in the first half of the 1920s, mentioning book "O Poço do Visconde" (The Viscount's Well), one of the episodes of series "Sí­tio do Pica-Pau Amarelo" (Yellow Woodpecker Ranch), where "Ms Benta tells Emí­lia: ‘Pinch me, pinch me, this is a dream', when she sees oil gushing behind the chicken run. "We have returned to the Ranch. It was Brazil and Petrobras found oil behind the chicken run," she said.

Anba – www.anba.com.br

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