Alternative energy powerhouse Brazil finds big oil

"Our ethanol program, our biodiesel program is still there. Petrobras is allocating $2.8 billion dollars to develop our infrastructure and production capacity for producing ethanol and biodiesel," Gabrielli told The Associated Press at an economic forum in Rio this spring.

The company's record is not untarnished, however.

In January 2000, a pipeline spilled about 350,000 gallons of crude into Rio's Guanabara Bay. Six months later, there was a spill at a refinery near Curitiba in Brazil's south — 1 million gallons of oil flooded two rivers. In March 2001, explosions on what was then the company's biggest offshore platform killed 11 workers. The rig sank, releasing more than 300,000 gallons of oil.

Petrobras quickly initiated a $4 billion investment program to prevent future disasters and Gabrielli says Petrobras can safely develop the difficult offshore fields.

Judy Dugan, a founder of OilWatchdog.org, cautions Brazilians against embracing an oil company as a national benefactor.

She said the track record of global oil companies shows none "truly have the good of the citizenry first in mind. The oil business creates corruption in many governments and large sources of political influence for an oil company's benefit, not for the benefit of citizens."

Brazil's Senate recently opened an inquiry into corruption at Petrobras. Opposition lawmakers say the company failed to pay more than $2 billion in taxes and that it overpays firms with ties to the Silva administration.

Silva swears Brazil will not go the way of a Venezuela or Nigeria, where petro dollars routinely mix with politics.

Instead, he is pushing a version of the Norwegian model, working to set up a government-controlled oil fund for social projects that he argues would operate with transparency. The opposition, however, fears giving the central government control of such a fund would give it massive new political influence.

Leitao, of Greenpeace, wonders if the billions of dollars needed to develop the offshore finds will be worth it should the price of oil fall.

"At the beginning of the 20th century, we were the largest producers of rubber in the world. People were lighting cigars with money," he said. "But the hangover came quickly because the English started producing rubber in Asia. The prices fell and our fortunes ended.

"We're not looking at the lessons our own history has given us."

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