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Brazilian president aims to eradicate poverty with oil billions

31st August 2009
  • Lula earmarks petrodollar profits for good works

  • 800km of 'pre-salt' oilfields could contain 150bn barrels

Brazilian president Luiz Inácio Lula da Silva today vowed to pump billions of petrodollars into the war on poverty in the wake of one of the world's biggest oil discoveries this decade.

Speaking on his weekly radio show, president Lula said: "Monday, 31 August, represents a new independence day for Brazil.

"We are talking about a discovery of oil that is almost 6,000m [under the sea], huge reserves that place Brazil among the biggest oil producers in the world."

He claimed that new legislation he is planning would allow profits to be used to "take care of" education and poverty once and for all.

Brazil has been celebrating an unexpected oil boom since November 2007, when state-controlled energy company Petrobras discovered the Tupi oilfield off Brazil's southeast coast.

Tupi, estimated to contain around 8bn barrels of oil, was the biggest discovery in the Americas in more than 30 years.  Following the discovery president Lula declared: "God is Brazilian".

His regional rival, Venezuelan president Hugo Chávez, joked the Brazilian president should be renamed "Sheikh Lula".

The Tupi field is part of the so-called "pre-salt" band, an 800km strip containing a series of vast deep-water oil reservoirs which could hold as much as 150bn barrels of oil.

The discovery of the region led Brazil to suspend the auctioning of all offshore oil blocks pending new legislation, intended to give the government a larger slice of profits. Lula is expected to create a "social fund", designed to channel oil profits into poverty-reduction initiatives, and should hand greater control of "strategic" oilfields to the government.

The changes, which have been heavily criticised by opposition politicians, still require approval from Brazil's congress.

Foreign oil companies have reacted nervously to speculation over the legislation, concerned that they will be handed a smaller role in future exploration of the region. While the global financial slump has seen many oil companies cutting back, Petrobras recently announced a five-year plan to invest $174bn (£108bn).

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