Brazilian president vows to hike oil production

Calgary Herald Saturday, January 04, 2003

Brazilian President Luiz Inacio Lula da Silva plans to keep Petroleo Brasileiro SA exploring for new oil reserves at home and abroad, as the state-run producer strives to end the country's dependence on imports.

Petrobras' new president, Jose Eduardo Dutra, said he would stick to company plans to spend $32 billion to boost oil output by almost half by 2006. Petrobras also will increase efforts to add reserves outside of Brazil, he said.

"This company has a strategy and it will be followed," Dutra said in a news conference. "We plan to complete our $32-billion expansion."

Lula, who took office Jan. 1, wants to use Latin America's largest publicly traded company to help meet his economic goals such as creating jobs, boosting demand for Brazilian goods and services and to contain inflation.

Petrobras produces about 1.7 million barrels of oil a day and is expanding output to reduce the country's oil deficit. Brazil today imports about 20 per cent of the oil it consumes.

The new government also plans to offer subsidies, low-priced credit and other incentives for local contractors to bid competitively on offshore oil platforms and other Petrobras projects, said Dilma Rousseff, Brazil's new mines and energy minister.

"This government is interested in strengthening national industry," Rousseff told a news conference. "We need to develop an industrial policy."

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