Sources: Associated Press,
Bloomberg News,
Business News Americas,
Financial Times,
Latin American Newsletters.
In 2001, Goldman Sachs began referring to Brazil, Russia, India, and China collectively using the acronym BRIC. It did so in order to highlight four emerging economic markets believed to have the potential for rapid and sustainable growth capable of transforming them into financial super-powers. At that time, Goldman Sachs predicted that by the year 2041, the economies of the BRIC nations would surpass those of the United States, Germany, Japan, France, Italy and the United Kingdom combined. For Brazil, however, the rapid growth that was predicted has not materialized.
In the second quarter of this year, China’s economy grew 11.3% while Brazil’s grew 1.2%, with estimates of a yearly growth rate reported around 3% —a pace much slower than that set by burgeoning powerhouses like China and India. This sluggish growth rate has produced plenty of negative press along with fervent, sometimes accusatory, debates which have been magnified this year due to the upcoming presidential election.
Yet, amid the clamor for economic reform, the accusations of government corruption, and the forecasts of a bleak economic future, Petrobras, Brazil’s state-owned oil company, is posed for future success. In early September, Petrobras acquired 50% ownership in a refinery located in Pasadena, Texas, which it plans to modify in order to accommodate the heavy crude found in the Campos Basin of Brazil. Additionally, in conjunction with Astra Oil Co., owners of the remaining 50%, they intend to double the refinery’s current capacity.
Petrobras has recently entered into other partnerships as well. In late August, officials announced plans to collaborate with Pemex, Mexico’s state-owned oil company, in conducting deep-sea oil explorations in the Gulf of Mexico. In the last few weeks, Petrobras teamed with Energia Argentina, Argentina’s oil company, to begin exploring the coast off of Buenos Aires, with plans to invest US$ 2.4 billion over the next five years in an attempt to utilize Argentina’s untapped oil fields. While forming partnerships and increasing foreign investments, Petrobras has also ensured its future growth by increasing demand and opening new markets for its ethanol operations.
On September 13, Brazil, India, and South Africa signed an agreement creating a bio-fuels task force to promote the use of ethanol and other alternative fuels. Brazil, the world’s leading exporter of ethanol, plans to open 12 new ethanol and sugar plants this year, and 17 more in 2007 to meet this future demand. In a similar move, Petrobras will begin exporting ethanol to Japan beginning in 2010.
Will Petrobras help to energize Brazil's lagging growth? Will increases in ethanol production give rise to a more robust rural and agricultural economy?
No comments:
Post a Comment