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Page added on October 31, 2008

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Crisis dents Brazil’s dreams of oil bonanza

RIO DE JANEIRO (Reuters) – Plummeting crude prices and the evaporation of global credit seem certain to delay development of huge oil reserves off Brazil’s coast, which the government had hoped would solve many of the country’s ills.

Just two months ago, with the price of oil at around $120 a barrel, Brazil was brimming with confidence over the potential 50-80 billion barrels of oil, with newspapers running cover stories and editorials on the issue daily.

President Luiz Inacio Lula da Silva, who called the oil a “gift from God,” advocated taking greater a cut for the government to drive Brazil to developed-country status. Analysts said this would also boost support for his chosen successor in 2010.

But the financial crisis has delayed plans by the government and state-controlled oil company Petrobras, which needs to spend hundreds of billions of dollars to extract the 7-km (4.5-mile) deep oil from beneath a thick layer of salt below the ocean floor.


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