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13
Second Quarter 2010
has access to the state-of-the-art technology
needed to extract oil from formations that lie
far below the ocean floor in deep water. And
here, nationalism may get in the way: Con-
gress is planning to restructure the petroleum
sector, giving greater control to the national
oil company, Petrobrás, and relegating for-
eign firms to a secondary role. Managing that
relationship sensibly will be of the essence.
The value of the oil to Brazil will also turn
on the world price of petroleum. Production
costs from these deep-water platforms are ex-
pected to run in the vicinity of $60 a barrel.
So Brazil is effectively betting that competing
technologies for making liquid fuels ­ every-
thing from biofuels to synthetic oil from tar
sands ­ will stumble on considerations of
cost or environmental damage.
All this suggests a problem that has long
dogged Latin America ­ low rates of saving ­
could prove Brazil's undoing. The economy
needs humungous amounts of capital to