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Oil Report

Brazil oil fields to start producing by 2015-Min

STOCKHOLM, Nov 26 (Reuters) - Brazilian Mining and Energy Minister Edison Lobao said on Thursday 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. (Editing by Dan Grebler); ((Stockholm Newsroom, tel: +46-8-700 1017, e-mail: stockholm.newsroom@thomsonreuters.com))

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