Brazil's Oil Reserves

Brazil was already rich in natural resources before the discovery of vast deep water oil reserves located off the southern coast. The Campos and Santos Basins contain the western hemisphere's largest new find in the past 30 years. The oil lies under approximately two miles of water, and a further three miles of salt, sand, and rock.

As of 2011, Brazil claimed proven oil reserves of 14.25 billion barrels. The quantity held in the new deep water reserves are the subject of considerable speculation.

Brazilian oil deposits below a layer of salt in the Atlantic Ocean hold at least 123 billion barrels of reserves, more than double government estimates, according to a university study by a former Petroleo Brasileiro SA geologist.

The research, which set out to show government figures were too optimistic, found they underestimated the area’s potential, said Hernani Chaves, a professor at the Rio de Janeiro State University who worked at Petrobras for 35 years. The forecast, which the study puts at a 90 percent probability, compares with the Brazilian oil regulator’s 50 billion-barrel estimate.

“We started with a skeptical view and finished with bigger numbers,” Chaves said in an interview at the university in the city of Rio. “When we got the first results I said: ‘Something is wrong, it’s too big.’”

While many consider these figures inflated, there is no doubt that Brazil has emerged as a major global energy power. Petrobras is looking to double production to 4 million barrels a day by 2020.

Under a law passed last year, Petrobras has been given exclusive rights as lead operator for exploration and development of the big offshore fields. Other companies can play only a strictly limited role as junior partners.

Some think the job is more than Petrobras can handle on its own. The company is experienced at deep-sea exploration. But this is an unusually tough job, drilling down through four miles of ocean and rocks and a thick layer of salt. Putting the burden on a single company will inevitably slow things down, Garmin says.

"People who have worked for years for Petrobras will tell you we're asking them to do too much," says Sotero, the Woodrow Wilson Center scholar.

Politicians in Brazil are still haggling as to how the spoils will be divided. In the meantime, much of the infrastructure spending under the government's growth acceleration program (PAC2) will be dedicated to energy and transportation. Investors can benefit by locating areas receiving PAC2 funds. One such area is the Pecém port and industrial development in the northeast state of Ceará. The local GDP is likely to double over the course of the next four years, giving rise to new local businesses, and driving property values higher.