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Public focus on Petrobras' scandals ignores its profitability

A man works at the Cidade Angra dos Reis offshore platform at the Lula oil field, about 300 km (186.4 miles) from the coast of Rio de Janeiro, February 16, 2011. Brazilian state oil company Petrobras will begin sequestering carbon dioxide in the offshore Lula oil field in the coming months to boost production and lower the environmental impact of its deep water crude exploration campaign.

SERGIO MORAES/REUTERS

Petrobras, for all its woes, remains profitable, and has oil and gas reserves of about 13 billion barrels, in Brazil and beyond. It has made this century's largest finds, in the 2.5-kilometre-deep "presalt" layer off the coast of Rio de Janeiro and Sao Paulo states, and continues to enjoy a reputation as an offshore technological leader.

Its production fell 2.2 per cent in 2013 to an average of 2.55 million barrels a day but has begun to creep up in the past couple of months.

But most Brazilians aren't interested in those figures: a public feeling newly empowered about corruption is fixated on the cascade of scandals.

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The case getting the most attention here – a feast for opposition politicians, because it's easily digestible by the public – concerns a refinery in Houston, which Petrobras bought for $1.2-billion from Astra, a Belgian oil trading company, in 2006. Astra had purchased it just a year earlier for $42.5-million. Brazilian President Dilma Rousseff was minister of energy when the purchase was made, and approved it, although she now says she was not given full information about the costs.

A former top Petrobras manager, Paulo Roberto Costa, is in jail pending a federal investigation into money-laundering, including the allegation that he and other managers accepted bribes to approve the wildly inflated Houston purchase.

There are also allegations that employees took $139-million (U.S.) in bribes from the Dutch firm SBM Offshore, when it was bidding to supply oil rigs here.

And employees are alleged to have received kickbacks through an overbilling scam with the construction giant Oderbrecht, on a contract that ran to $825-million

Graca Foster is also being criticized for the price tag on the Abreu e Lima refinery near Recife, which is expected to cost $20-billion by the time it opens later this year, 10 times the original budget. A refinery in Argentina, meanwhile, has been sold off for dramatically less than its assessed value; police have opened an investigation into that transaction, too.

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About the Author
Latin America Bureau Chief

Stephanie Nolen is the Latin America correspondent for The Globe and Mail. After years as a roving correspondent that included coverage of the wars in Iraq and Afghanistan, Stephanie moved to Johannesburg in 2003 to open a new bureau for The Globe, to report on what she believed was the world's biggest uncovered story, Africa's AIDS pandemic. More

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