Petrobras blasts G8 on energy security

THE chief executive of Petrobras, Brazil's state-owned energy group, has criticised the group of eight (G8) industrialised countries for failing in their quest to enhance world energy security.
"I think the developed countries are failing on both ends," Jose Sergio Gabrielli de Azevedo said yesterday.
"We need to increase (oil and gas) supply. You need to develop unconventional oil -- deep water, ultra-deep water. On the other hand, you need to find substitutes on the demand side, for example biofuels."
Mr Gabrielli de Azevedo also criticised international oil companies for not investing sufficiently in extracting new energy sources and governments for not doing enough to boost production, either through incentives or enforcing requirements.
International oil prices have reached $US77.23 a barrel, with traders watching with concern at the escalating violence in the Middle East.
Mr Gabrielli de Azevedo said that the lack of G8 leadership would mean that the investment policies of national oil companies and of governments of resource-rich countries such as Russia would play an increasingly important roll in determining future average oil prices.
"Russia's production is going to become more and more important and will more and more influence the oil price," he said.
Brazil is a leading producer of ethanol, a motor fuel additive that has seen a boost in investment over the past year after US lawmakers last year ruled that companies would be liable for any contamination claims against MTBE, ethanol's main competitor and a known carcinogenic.
But Mr Gabrielli de Azevedo recently told New York investors: "Market regulations in the US and the auto industry will need to change for us to get real access to that market."
Petrobras on Friday unveiled new technology to convert vegetable oil to diesel and announced earlier this month that it would boost its investment plans by 77 per cent, saying it would spend $US87billion ($115 billion) in investments from 2007-11.
The company, which was one of the biggest victim's of Bolivia's decision to nationalise its gas industry, plans to spend most of the money boosting Brazil's oil and gas production from 1.8 million barrels per day to 4.6 million per day by 2015.
Petrobras, 55.7 per cent of whose voting shares are owned by the Government, is often held up as one of the most progressive national oil companies.
It is one of the few companies that can compete with international oil companies, such as BP and ExxonMobil, in producing oil from deep waters.
But many of its strides were made during by the predecessor of Luiz Inacio Lula da Silva, Brazil's current President.
It was Fernando Henrique Cardoso who opened Brazil's energy industry to foreign energy companies and forced Petrobras to compete.
Since then, however, the company has lost some of its independence from the government, with party loyalists in key positions and some policies that favour the Brazilian consumers more than the companies' shareholders.