Alternative energy powerhouse Brazil finds big oil

An enormous offshore field in territorial waters — the biggest Western Hemisphere oil discovery in 30 years — has Brazilians saying, "Drill, baby, drill," while environmentalists fear the nation will take a big leap backward in its hunt for crude.

There has been virtually no public debate on the potential environmental costs of retrieving the billions of barrels of oil, a project one expert said will be as difficult as landing a man on the moon.

"The government is whipping Brazil into a euphoria that this is going to be a solution for all our societal problems," said Sergio Leitao, director of public policies for Greenpeace Brasil. "Brazil is no longer seriously looking at alternatives."

Home to the bulk of the Amazon rainforest, Brazil for decades has developed alternative energy as an issue of national security following severe energy shortages in the 1970s. It uses hydroelectric power for more than 80% of its energy needs, is the world's largest exporter of ethanol, and nine out of every 10 cars sold in the nation can run on ethanol or a combination of ethanol and gasoline.

A U.N. study found that in 2008, Brazil accounted for almost all of Latin America's renewable energy investment, to the tune of $10.8 billion.

But 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.

Thirty years ago, more than 85% of Brazil's oil came from foreign sources. Today, it is a net exporter.

There have been a series of other discoveries since Tupi — each lying at least 115 miles (185 kilometers) offshore, more than a mile below the ocean's surface and under another 2.5 miles (4 kilometers) of earth and salt. 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 savior for 57 million Brazilians living in poverty — 30% 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.

Founded in 1953 to fend off an economic crisis and dependency on foreign oil, Petrobras has long embodied Brazilian nationalism and the notion of shielding domestic wealth from foreigners — particularly the United States and Europe.

In 2008, Brazil's total oil and natural gas production was nearly 2.3 million barrels per day. Petrobras was responsible for more than 96% of it.

"Most Brazilians think of Petrobras like they think of their soccer stars," said Eric Smith, an offshore oil expert at Tulane University in New Orleans who likened efforts to get at Brazil's oil to a trip to the moon. "Try to find Americans who support Exxon like that."

Petrobras fattens government coffers with more than $30 billion a year in taxes and royalties.

The company is led by Sergio Gabrielli, a bearded economics professor-on-leave, who was jailed under the nation's military regime for his political activities. He defends the company's environmental record emphatically.

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