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Brazil Passes On Saudi Invite To Join OPEC

OPEC logo on a oil barrel with an oil rig in the background
AP / CBS
Brazil has declined a recent invitation from Saudi Arabia to join OPEC, citing plans to refine, not export, crude oil from its recently discovered deep water reserves, top energy officials said Monday.

Mines and Energy Minister Edison Lobao said Brazil determined it doesn't need the cartel, because it plans to boost oil income by refining crude into products like gasoline for export abroad, the state's Agencia Brasil news agency reported.

Paulo Roberto Costa, a high-ranking executive with Brazil's state-run Petroleo Brasileiro SA oil company, confirmed the government had decided not to join OPEC.

"Brazil won't be a big exporter of oil, that's already defined," Costa told Agencia Brasil at the Rio Oil & Gas Expo 2008 industry conference in Rio de Janeiro. "Brazil was invited to participate in OPEC and did not accept because our priority is refining here and exporting derivatives."

Analysts say the reserves — found in the last year thousands of feet under the ocean floor and several hundred miles off the Rio de Janeiro coast — may contain 55 billion barrels of oil, enough to catapult Brazil to superpower oil status.

By refining its own oil, instead of shipping it abroad to be refined, Lobao said Brazil will generate more money and jobs at home. The country is undergoing an economic boom but still has one of the world's deepest divides between rich and poor.

Under orders from President Luiz Inacio Lula da Silva, a commission of government ministers is examining possible changes in the nation's oil law. Silva insists profits from the new oil discoveries be used to fight poverty and improve education.

Agencia Brasil said the Saudi OPEC invite came at a "recent" meeting of oil producing nations, but gave no other details. OPEC met last week in Vienna.

Brazil last month declined an invitation extended by Iran to join the Organization of Petroleum Exporting Countries. Lobao did not specify why at the time, saying only that Brazil had "other priorities."

Also Monday, Petrobras said it awarded contracts to build 10 new floating production, storage and offloading units to develop its new fields.

Petrobras will rent two units to produce 100,000 barrels a day by 2014, and will build eight others to produce up to 120,000 barrels a day by 2016, according to a company statement. A spokesman declined to give disclose how much the contracts were worth or with whom they'd been signed.

U.S. traded shares of Petrobras plunged 11.7 percent to $40.35 in New York on Monday, amid a global stock meltdown and oil prices that closed below $100 a barrel for the first time in six months.