Petrobras, the huge state oil firm in Brazil, has announced another big oil find. The well is about 275 kms off the Sao Paulo state coast in a water depth of over 2000m. It appears this is a light crude find, compared with most Brazilian crude which is heavy. Brazil has announced a spate of big discoveries in the pre-salt region, located under a thick layer of salt 7 kms beneath the ocean's surface. This is going require serious technology. No doubt the technological hurdles will be overcome in the years ahead. Where does this leave Brazil? Currently it is a darling of the international investment community. But down the track the country runs the risk of the 'Dutch disease'. Already it complains of currency wars which are pushing up its exchange rate to overvalued levels. Chinese investment into Brazil has skyrocketed. All these demands for Brazilian currency plus Brazil's own high rate of government spending are leading to problems down the track. Brazil has historically been a 3-4% growth economy and things could well start to break if it keeps on growing at 5-7%, as recently. The QSL is from Radio Record in Sao Paulo, heard in Otford, Kent in 2000.
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