Oil Discovery

SWOT Opportunity: Oil Discovery
Countries tend to profit when they contain natural resources such as oil. Brazil recently discovered a vast amount of deep water oil reserves off its' coast.

"Excitement about the potential of Brazil as a massive new source of oil and gas intensified yesterday after a senior energy ministry official declared that the newly found Carioca field could have 33bn barrels in place.

The comments by Haroldo Lima, head of Brazil's National Petroleum Agency, that the country was harbouring an oil find that vied with the largest in Saudi Arabia and Kuwait, sent the price of shares in BG, the UK exploration company, up 5% and helped lift the wider London market. The news of the discovery also contradicts pronouncements that growth in world oil production may have peaked.

Oil experts said it was the biggest find anywhere in the world for at least seven years and would push Brazil's reserves into the global top 10 but comparisons to Saudi Arabia may be over-optimistic. Brazil's total reserves will rise to about 20bn barrels as a result of the discovery, compared with Saudi Arabia's 260bn, whose daily production is four times that of the Brazil.

Countries tend to gain profit from exporting oil and cut any cost from the importation of oil. The economy can use the additional revenues to increase funding in areas that lead to long term positive growth, such as in the education and health sectors."

To get to the oil, the Brazilian government is spending $174 billion over the next few years. These expenditures will benefit firms such as GE, Petrobras, Schlumberger, and Halliburton, as well as many foreign firms.

Source:http://www.guardian.co.uk/world/2007/nov/10/brazil.oil