Brazilian Mining and Energy Minister Edison Lobao said his country could start producing oil from its vast offshore crude reserves in 5 to 6 years.

“The sub-salt will start producing in about five to six years,” he
said, speaking through an interpreter during a visit to the Swedish
capital for bilateral talks on bioenergy.

Brazil discovered some eight billion barrels of crude in the Tupi field
in 2007, opening a new oil exploration frontier deep below the Atlantic
that could hold more than 50 billion barrels.

Lobao said he expected legislation governing exploitation of the oil fields to pass a final vote in Congress early next year.

“I believe that the voting will be concluded by February, or at the latest, March,” he said.

He added that using Brazil’s sovereign wealth fund to invest part of
the country’s future oil revenue abroad would help stave off economic
problems such as high inflation and excessive currency appreciation.

“There is a vaccine against ‘Dutch disease,’ which is the formation of a sovereign fund, deposited abroad,” Lobao said.

“Dutch disease” refers to problems suffered by resource-rich countries
whose non-oil economy declines due in part to currency appreciation, as
was the case with the Netherlands in the 1960s and ’70s following the
discovery of vast reserves of natural gas.

Brazil’s sovereign wealth fund, started earlier this year, is worth 0.5 percent of GDP.

President Luiz Inacio Lula da Silva is trying to boost state control
over the massive subsalt oil deposits that could turn Brazil into a
major energy exporter.

Source: Reuters

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