Brazil's Pre-Salt Oil Potential: The Hype and the Reality

19 Pages Posted: 18 Jul 2012  

Mamdouh G. Salameh

World Bank - Oil Market Consultancy Service

Date Written: July 16, 2012

Abstract

There is a great hype about Brazil’s pre-salt oil potential and the impact it will eventually have on the global oil market. Some sources say that it could vault Brazil to seventh place in the world rankings in terms of proven oil reserves behind Saudi Arabia, Venezuela, Iran, Iraq, Kuwait and United Arab Emirates. Others claim that Brazil could emerge as a major oil producer and exporter and that this will certainly change the balance of oil distribution in the world with very important geopolitical implications for the United States’ dependence on Middle East oil. Others, in contrast, see Brazil as an overstated high-risk oil province whose pre-salt oil is extremely challenging and very costly to produce. The reality, as always, is somewhere in between. Even with Brazil’s growing oil reserves and accelerating production, the country could never become a major oil exporter as all the incremental oil production will be needed to fuel the country’s economic growth. Brazil could only aspire to remain self-sufficient if its current economic growth continues its surge into the future. While Brazil’s oil wealth will certainly accelerate the country’s ascent into the top ranks of the world’s economic powers, it will hardly make a dent in the global oil market and the price of oil.

Keywords: Pre-salt, reserves, hype, Gulf, price

Suggested Citation

Salameh, Mamdouh G., Brazil's Pre-Salt Oil Potential: The Hype and the Reality (July 16, 2012). USAEE Working Paper No. 2109947. Available at SSRN: https://ssrn.com/abstract=2109947 or http://dx.doi.org/10.2139/ssrn.2109947

Mamdouh G. Salameh (Contact Author)

World Bank - Oil Market Consultancy Service ( email )

Spring Croft, Sturt Avenue
Haslemere
Surrey, GU27 3SJ
United Kingdom
01428644137 (Phone)
01428656262 (Fax)

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