President of Brazil interested in Petrobras coming to Guyana - Jagdeo

President of Brazil interested in Petrobras coming to Guyana – Jagdeo

Jun 11, 2023 ExxonMobil, News, Oil & Gas

Kaieteur News – Recently, Guyana’s Vice President, Dr. Bharrat Jagdeo, revealed that President of Brazil, Luiz Inácio Lula da Silva, who not too long ago took back leadership of the country, is very interested in Petrobras having a place in Guyana’s oil sector.

“President [Irfaan] Ali spoke with President Lula and he was [in Brazil]. So I did speak to [Lula] briefly on the phone. President Ali mentioned to me that the President of Brazil is very much interested in Petrobras’ participation here. I don’t know in what form that will happen, but he’s very interested in it.” said Jagdeo last Thursday.

Petrobras, Brazil’s state-run oil company, had opted out of bidding for oil blocks in Guyana’s auction due to other plans it has, to undertake drilling off the coast of Brazil. When asked whether the decision not to bid here had anything to do with the Venezuela border issue, Jagdeo said no.

Jagdeo stated that during a conversation with Petrobras officials at CERAWeek in Houston, it was clear that the energy giant was deeply engaged in its own exploration efforts in the Atlantic waters, just east of Guyana. The officials, he said, conveyed their excitement over their seismic findings and optimism that the same success Exxon has in Guyana, would be replicated in their territory.

While Petrobras’ current focus is on their own offshore drilling, Guyana is seeking closer relations with Brazil, including a road link. With Guyana’s definite interest in a stronger energy relationship as well, Petrobras could come to Guyana one day. However, Jagdeo is not sure in what capacity. There is also the government-to-government partnerships Jagdeo and President Ali had discussed, for the development of certain oil blocks. Guyana could learn a thing or two from Brazil, good and bad. Guyana is a newcomer, while Brazil, through Petrobras, has decades of experience in deep-water exploration.

However, the possible entrance of Petrobras into Guyana would require careful oversight given the company’s troubled history. The Brazilian company was at the center of one of the largest corruption scandals in history, known as the Carwash scandal, which began in 2014.

The Carwash (or “Lava Jato” in Portuguese) investigation was initially a money-laundering probe but soon morphed into an extensive investigation into high-level corruption at Petrobras. The scheme involved company executives, government officials, and leading Brazilian companies. The corruption resulted in billions of dollars in losses for Petrobras and a massive shake-up in Brazilian politics.

In the fallout, several were jailed, the company’s reputation was severely tarnished, and the political landscape of Brazil changed dramatically. Petrobras has since worked to regain its status as a reputable company, through reforms.

Given this history, Guyana, with its burgeoning oil and gas sector, would need to be vigilant should Petrobras begin operations there. Lessons from the Carwash scandal should underline the importance of strict regulation, transparency, and the enforcement of anti-corruption measures. This would be a critical aspect of ensuring the integrity and sustainability of Guyana’s growing oil sector.