Brazil’s oil giant may be paying too much to pump the stuff
FOUR years ago Brazil struck oil—up to 350km (220 miles) offshore and buried under deep water and thick layers of rock, sand and corrosive salt. In places, the oil fields are 7km below the surface, so getting the black stuff out was always going to be hard. Now it looks like finding the funding will be tricky too.
On September 1st, two months later than planned, Brazil’s government made public the price it will demand for an estimated 5 billion barrels, mostly in the Franco field off the coast of Rio de Janeiro. Petrobras, the national oil company that was partially privatised in 1997 (Brazil’s government still owns 40% and a majority of voting rights), will have to pay $8.51 a barrel. Analysts frown that $6 would be more reasonable. Oil is $74 a barrel, on the surface, but is worth much less underground. …
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