Oil as a Political Tool in Brazil

The sudden November 8th announcement of the size of the “Tupi” oil field has pushed Brazil into a delicate and potentially powerful economic and political position in the Americas.

Petrobras, the Brazilian state oil company, has known about that the field for more than a year now. However, they have up to now been very tight lipped as to the size of Tupi, which is located off the southeastern coast of Brazil. Petrobras recently cast aside their silent treatment in regards to Tupi, which was revealed to have between five and eight billion barrels of crude oil and natural gas.

The possibilities of this new development have ramifications for three main actors. Namely, the United States, Venezuela, and of course Brazil. Firstly, Brazil who only last year utilized its hydroelectric and ethanol energy sources to become a minor energy exporter. With the discovery of Tupi and more northerly oil field in the Campos and Espirito Santo basins, Brazil could possibly export as much light oil (the most valuable and least expensive to produce form of crude oil) as some countries in the Arab world, and even Venezuela.

Venezuela, which is currently the leading energy exporter of the starved southern portion of the Americas, has interests in the newly discovered oil fields. As was stated in the November 17th New York Times piece entitled Brazil Discovers an Oil Field Can Be a Political Tool , by Alexei Barrionuevo, “Mr. Chavez nervously jested that Mr. da Silva was now an “oil magnate.” He also quickly suggested that the two nations create an Amazonian energy region similar to the Caribbean and Andean integration efforts Venezuela had been pushing for.” With this, Venezuela has shown what it perceives to be its interests involving the new Brazilian discoveries. Caracas has never held illusions of having a full scale energy monopoly in South America; however it is certainly interested in cooperation with Brazil if the latter will allow the cooperation.

A force that could be a counter to Venezuelan influence is the United States. With Venezuelan President Chavez’s fiery rhetoric directed towards the United States, it is not too hard to imagine that the United States would attempt to use its regional influence to affect the policies of Brazil, most likely in order to undermine Venezuelan attempts to form a cooperative partnership between the two states. The United States’ interests in the matter is to curb Venezuelan power in the region, by creating a sort of regional power “balance” between Venezuela and Brazil, the latter of whom the United States would hope to maintain friendly relations with.

With the attention of a great power like the United States, and a regional power like Venezuela, Brazil finds itself in a position of power that gives it several opportunities, whether or not the Brazilian government headed by President da Silva will choose a path of unilateral action and stay completely unaffected by the two interceding powers, or cooperation with the two powers vying for its attention is yet to be seen, but it is vital to understand that only Brazil will truly determine its own actions, and that it holds all cards involved in the situation.