Particularly, this:

Continuing my pointless “I got the day off” wikileaks search for info on U.S. investment in Brazil’s oil industry, I found this classified cable on August 2005 meetings between Brazilian and U.S. trade representatives. Of particular note is the section on trade liberalization — specifically, a comment made by a mining magnate that was present:

Roger Agnelli of mining giant CVRD observed that Brazil and the U.S. have complementary economies that would stand to gain substantially from integration.

I wondered why he would even be there, so I looked up Agnelli and it turns out that in addition to the iron-ore business CVRD (now known as Vale), he also sat on the board of Petrobas, Brazil’s state-assisted oil company, and on Anadarko’s Global Advisory Board. Master Caution followers of the last few hours (all zero of you) will remember that Anadarko was one of the companies present at the 2008 meeting between U.S. oil companies and the Ambassador to Brazil that kicked off my interest in this subject in the first place.

That 2008 meeting, which took place just days after the price of oil topped $100 for the first time, also took place in a time of exciting oil discovery off the Atlantic Coast of Brazil. Two weeks later, Petrobas would announce the discovery of another enormous natural gas and oil condensate field nearby in the Atlantic, and energy pundits would wonder aloud in the coming months whether Brazil’s reserves would create a petroleum-independent Western Hemisphere.

“Pre-salt oil is like a pretty woman on a dance floor full of men,” Luiz Inácio Lula da Silva, Brazil’s president, put it bluntly. “Everybody wants a go.”

Flash forward to January 1, 2011, and newly sworn in Brazilian President Dilma Rousseff calls the oil and gas reserves off her Atlantic coast Brazil’s “passport to the future.”

I’m still having trouble connecting the dots here. I kind of feel like the U.S. government, in the form of vehicles like the U.S. Commercial Service and others, went down to Brazil over the course of the 2000s and pushed for more open trade policies because major U.S. oil companies told them to. My eyes hurt and I need more coffee and I’m not sure the story goes any further than that, nor am I sure that it’s all that interesting. U.S. companies meddling in South American politics for the benefit of energy companies: big deal, right? Still, it’s an interesting research project and it’s keeping my mind active while I wait to hear back about grad school applications.

More soon. Any help/comments/direction would be much appreciated.

“Brazil Cost”?

January 17, 2011

In my last post I noted how due to a surplus of free time I had begun sifting through the diplomatic cables released by WikiLeaks and found an interesting item about a 2008 meeting between major U.S. oil executives and the Ambassador to Brazil, in which the oil companies saw a “positive” environment for petroleum-related investments in Brazil.

I just want to see if anything came of it and what factors led up to it. So I’ve started searching, and just now found this. Check out point 8, about halfway down, titled “Brazil Cost.” This cable is from 2003 and apparently at that time the idea of investing in Brazil wasn’t quite as rosy (this was during negotiations and campaigning for the creation of a Free Trade Area of the Americas (FTAA), a debate that still goes on today throughout the Western Hemisphere).

Although developed country protectionism is always cited as a major problem undermining Brazil’s competitiveness, so are internal problems sometimes called the “Brazil cost,” i.e., high costs associated with Brazil’s tax structure, outdated social security system, labor code, poor education, and, in general, bureaucratic obstacles to commerce. While the GOB is committed to social security and tax reform, it seems to lack faith it can lower the “Brazil cost” sufficiently in the near term to guarantee Brazilian competitiveness in the free trade environment an FTAA agreement would create.

So what happened between 2003 and 2008? Was the “Brazil cost” lowered significantly enough to where U.S. oil companies believed the Brazilian investment picture was “positive”? Or does this just point to a difference between the outlook in Brazil for oil companies vs. trade generally?

So I had the day off today and I opted to read the paper for the first time in awhile this morning, and this story about an ex-Swiss banker giving information to WikiLeaks inspired me to take a look through those Cablegate memos that caused such a stir in the last few months.

I started by looking through some cables that had come out at the time of various events like the first Gulf War. Then I just started chronologically reading different bits of this or that from a year picked at random (2004) and found a hilarious example of gossipy celeb-worship on the part of the U.S. diplomatic corps. All the while I noted the increased frequency of dispatches coming from Brazil, as I tried to remember news stories from 2004 that would warrant so much information coming from the U.S. embassy there. There was, of course, the Aristide situation, which Brazil helped to deal with from a U.S. diplomatic standpoint.

But then I found this, from 2008: a cable from Rio de Janeiro given the subject heading “U.S. OIL COMPANIES ON INVESTMENT OPPORTUNITIES IN BRAZIL.” It comes from a roundtable discussion Organized by the U.S. Commercial Service between then-Ambassador to Brazil Clifford Sobel and top-level executives from Chevron, Exxon Mobil, Devon Energy, Anadarko Petroleum Corporation, and Hess Corporation. The meeting took place on January 8, 2008, six days after the price of petroleum hit $100 a barrel for the first time.

According to the cable, the executives called the climate for investing in Brazilian oil “positive,” and Ambassador Sobel offers to advocate for them to the Brazilian government and state-controlled petroleum entities. I decided to look back through the earlier cables from Brazil, and see if I could trace any of the activity from prior years and connect it to the favorable situation (as seen by the oil executives) in 2008.

After about an hour of hard reading and googling, I found this site, CableGateGame. The amount of information contained in the WikiLeaks cables is immense and daunting, and CableGate can help with summaries of complicated texts, but it suffers from an awkward format. It’s still hard to know where to start.

I’m going to keep searching through CableGate and WikiLeaks and see if I can turn anything up that would explain/illuminate the meeting between major American oil executives and the government of Brazil. Questions I have include: just how “positive” is the investment climate in Brazil? What changes have taken place in the last decade to bring this situation about? How much oil is in Brazil? How will it be gathered and who benefits the most from a favorable oil trade with Brazil? I have others, but that’s my starting point. I’ll try to keep updating as info comes in and I welcome any help from whoever out there sees this.

Happy hunting,