Petrobras depends on foreign oil giants and contractors to do the lion's share of its work for them offshore. Foreign engineers that have worked in Brazil complain about the incompetence of their Brazilian counterparts. Last year, Petrobras reported 57 oil leaks that released 4,201 barrels of oil into the ocean, far more than Chevron's infringement last month (and not surprisingly, Petrobras reported significantly smaller fines -- only $43 million in 2010). And this is, after all, the company that in 2000 "accidentally" sank the world's largest oil platform at the time just a few months after taking ownership of it. The billions of dollars that went down the drain in that incident convinced Brazil that it needed foreign help if it ever hoped to become an oil exporting powerhouse.
But the memories of that oil disaster seem to have faded in Brasilia. Petrobras's participation in the ultra-deep water oil business remains mostly passive and is viewed by the oil industry as another form of royalty payment to the state. But under a new law passed last year, Petrobras must now have a minimum 30% stake in any new oil ventures connected with the newly discovered mega "pre-salt" offshore fields.
If Brazil hopes to grow its oil industry it will need the technology and equipment of foreign oil companies. It has already irked many of them by forcing them to turn over more of their future profit to Petrobras. But the threat of mega fines eating away at the rest of their profits will make many stay home.
