Half a decade has passed since Brazilians celebrated the discovery of huge amounts of oil in deep-sea fields by the national oil company, Petrobras, triumphantly positioning the country to surge into the top ranks of global producers. But now another kind of energy shock is unfolding: the colossal company, long known for its might, is losing the race to keep up with the nation’s growing energy demands.
Saddled with a nationalist mandate to buy ships, oil platforms and other equipment from lethargic Brazilian companies, the oil giant is now facing soaring debt, major projects mired in delays and older fields, once prodigious, that are yielding less oil. The undersea bounty in its grasp also remains devilishly complex to exploit.
Now, instead of symbolizing Brazil’s rise as a global powerhouse, Petrobras embodies the sluggishness of the nation’s economy itself, which, after racing ahead at 7.5 percent in 2010, slowed to less than 1 percent last year, eclipsed by growth in other Latin American nations like Mexico and Peru.
Until recently, Petrobras was second in value only to ExxonMobil among publicly traded energy companies. But its fortunes have tumbled to the point that it is now worth less than Colombia’s national oil company. That fall has accentuated an increasingly bitter debate here over PresidentDilma Rousseff’s attempts to use Petrobras to shield the Brazilian population from the nation’s economic slowdown.
“Petrobras was once thought indestructible, but that is no longer the case,” said Adriano Pires, a prominent Brazilian energy consultant. “Petrobras is now a tool of short-term economic policy, used to protect domestic industry from competition and fight inflation. This disastrous process will intensify if it is not reversed.”
Ms. Rousseff, like her predecessor and political mentor, Luiz Inácio Lula da Silva, has relied heavily on state companies like Petrobras to create jobs and spur the economy. As a result, the president and her top advisers argue, unemployment remains near historic lows, an approach in economic management that contrasts sharply with Europe and the United States.
In a recent speech, Ms. Rousseff explained that her government’s priority was lifting millions of Brazilians out of poverty.
“Those betting against us,” she warned, “will suffer serious financial and political losses.”
Bolstering Ms. Rousseff’s approval ratings going into a presidential election in 2014, Petrobras is building new refineries, pursuing offshore oil and buying most of its equipment from Brazilian companies, all of which have created tens of thousands of jobs and delivered some tangible political benefits.
“My life is better,” said Adinael Soares Silva, 38, a welder at a Petrobras refinery under construction in Itaboraí, a city near Rio de Janeiro. He said he was pleased with his salary of about $800 a month. “Where I was, I didn’t have enough to have a savings account,” he said. “Now I do.”
But while Petrobras has helped keep Brazil’s unemployment low, around 5.4 percent, a growing chorus of critics point to the obvious problems at the company, including its backlog of projects and an inability to satisfy the country’s thirst for oil, forcing it to import foreign gasoline and sell it at a loss.
After Brazil made its deep-sea oil discoveries in 2007, the government pushed to put Petrobras firmly in control of the new areas, a move that critics say could strain the company even further. It was a marked departure from the 1990s, when authorities ended Petrobras’s monopoly as part of a radical restructuring of the economy. Petrobras remained under state control but was exposed to market forces, emerging as a hybrid nimbly competing with foreign oil companies.
Today, Petrobras seems far less nimble. In 2012, its production fell 2 percent, the first such decline in years, and output fell slightly again at the start of this year.
Taylor Barnes contributed reporting.
Article source: http://www.nytimes.com/2013/03/27/world/americas/petrobras-brazils-oil-giant-struggles-to-regain-lost-swagger.html?partner=rss&emc=rss