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Brazil Nears Oil Independence

RENEE MONTAGNE, host:

The country that pioneered fossil fuel alternatives, in particular, ethanol, is on the verge of an energy milestone. Brazil has announced that by mid-year it expects to be self-sufficient in oil. Oil now makes up just 30 percent of the country's energy sector. From Rio de Janeiro, NPR's Julie McCarthy reports.

JULIE MCCARTHY reporting:

Off the coast of Rio de Janeiro, Brazil's latest deep-water oil platform is expected to boost the country's overall petroleum production to 1.9 million barrels a day, enough, say officials and the Brazilian oil giant, Petrobras, to make Brazil oil self-sufficient.

Sporting an orange jumpsuit, President Luiz Inacio Lula da Silva, opened the spigot of the new $634 million dollar rig Friday and raised his oil-drenched hands, to the smiles of workers and Petrobras top brass.

Lula's administration has been mired in scandal, and the country's cartoonists were quick to seize on the moment. One depicted the soiled hands of the President with the caption, "We have reached self-sufficiency in oil, chocolate sauce, or mud?" But such sniping did little to dim the celebrations.

(Soundbite of classical music)

The country's elite gathered at Rio's National Historical Museum to the strains of a string quartet to mark the occasions, while President Lula touted Brazil's achievements.

President LUIZ INACIO LULA DA SILVA (President of Brazil): (Foreign language spoken)

MCCARTHY: Lula told the crowd, with petroleum costing $70.00 a barrel, with the world's supply of oil in decline and the fight for control of supplies constant, being self-sufficient in petroleum is a formidable triumph of economic stability and security, he said.

Lula noted that the visionaries who believed in Brazil's oil independence were once ridiculed as utopian dreamers. Petrobras officials acknowledged that Brazil will continue to import light crude oil to operate its refineries. But when it hits the benchmark of some two million barrels a day by mid-year, Petrobras says the country will be producing as much oil as it consumes.

By contrast, the United States consumes some twenty million barrels a day, 10-times Brazil, and remains heavily reliant on foreign oil. But Petrobras President, Jose Sérgio Gabrielle, on hand for the festivities, says comparing the two vastly different countries is tricky.

Mr. JOSE SERGIO GABRIELLE (President and CEO, Petrobras): Out situation is completely different from the United States', your situation, because the only way that you can assure that we can access oil is if we produce; because we don't have the economic power of the U.S. economy, and we don't have the military power of the American army, and we don't have the political power of the American government. In (unintelligible), we need to have good source of supply, or produce.

MCCARTHY: Political scientist Luiz Predone(ph) says Brazilian consumers could be forgiven for not rejoicing at their newfound oil independence. Gas stations in Rio quote the average price at the pump as $5.85 a gallon.

Mr. LUIZ PREDONE (Brazilian political scientist): I would like to say that gasoline prices and diesel prices were cheaper. Transport, you know, transportation is one of the heaviest percentage of salaries spent by the middle class and lower middle class, and that counts about 35 percent of the their budgets.

MCCARTHY: But industry analysts say being oil self-sufficient will help Brazil's balance of trade and protect consumers from the turbulence of the external market.

Petrobras CEO Gabrielle says if there are lessons for the United States, they are twofold: maintain the search for new production, and find alternatives to meet rising energy demands.

Julie McCarthy, NPR News, Rio de Janeiro. Transcript provided by NPR, Copyright NPR.

Julie McCarthy has spent most of career traveling the world for NPR. She's covered wars, prime ministers, presidents and paupers. But her favorite stories "are about the common man or woman doing uncommon things," she says.