US and China compete for Brazil’s oil

April 16, 2011 6:24 am by Joe Leahy

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So why did President Barack Obama make a beeline for Brazil within the first 100 days in office of the country’s new president, Dilma Rousseff?

The obvious answer is because he wanted to get in early to build a more constructive relationship between the US and Brazil than existed under Rousseff’s predecessor, Luiz Inácio Lula da Silva. In spite of his great charisma, Lula’s overtures to Iran irritated Washington and made him seem like an unreliable partner on the foreign stage.

But why the rush? Why not allow Rousseff to settle in and get a better measure of her administration before pinning the diplomatic flag of the US to the Palacio do Planalto, the president’s palace in Brasília?

The true answer might lie in the following passage from Obama’s remarks during a joint press statement with Rousseff after their meeting in mid-March.

“We’re creating a new strategic energy dialogue to make sure that the highest levels of our governments are working together to seize new opportunities. In particular, with the new oil finds off Brazil, President Rousseff has said that Brazil wants to be a major supplier of new stable sources of energy, and I’ve told her that the United States wants to be a major customer, which would be a win-win for both our countries.”

So it was about oil. Brazil’s “pre-salt” deepwater finds, which are just starting to come on stream. And not just any oil but the biggest offshore discoveries in history and all of it located in a stable democracy in the western hemisphere, not the Middle East. No wonder Obama could not wait to fly Air Force One in a southerly direction.

Fast forward to this week and Rousseff is visiting China. Among the corporate deals on the sidelines of the trip, a proposal by Foxconn, Taiwanese-owned electronics group with large operations in China, to invest $12bn in Brazil caught the headlines.

But perhaps more important in the long-run was the courting during the visit of Petrobras, the Brazilian oil major, by Chinese peer Sinopec. Petrobras already has a deal to supply oil to Sinopec from the pre-salt fields. But Sinopec went further this week by finalizing a joint venture with Petrobras to explore more blocks off the coast of northern Brazil, away from the “pre-salt” areas.

The US is realizing that strategic competition with China for scarce resources is no longer something it does far from home. Latin America, once the backyard of the US, is shaping up to become the stage for the next tussle between these two giants.

Original Article

Posted on April 18, 2011, in AMERICAS, Brazil, GEOPOLITICS, Natural Gas, Oil & Gas - offshore, United States and tagged , , , , , , , , , , , , , . Bookmark the permalink. Comments Off on US and China compete for Brazil’s oil.

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