Brazil seeks wider control on continental shelf resources

Sept. 8, 2010 at 5:47 PM
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RIO DE JANEIRO, Sept. 8 (UPI) -- Brazil expanded its offshore border through a unilateral navy order, opening possibilities of copycat actions elsewhere and asserting its interest in hydrocarbon and mineral resources beyond the 200-nautical-mile zone claimed by some other Latin American nations.

The immediate effect of the naval order would be two-fold, analysts said.

First, it would challenge the United Nations' rule on what generally is a country's offshore border -- until recently accepted as 12 nautical miles but increasingly adopted as 200 nautical miles by nations bordering seas.

Secondly, analysts said, the naval edict puts government stamp of ownership on the sea waters designated as part of Brazil, ruling out private enterprise ventures into the area without state approval.

Brazil has had a series of hydrocarbon discoveries offshore that raised the stakes for both security of the new oil fields and the cash required to exploit them.

The newest light crude oil field is offshore, in the same area off the coast of Brazil as the giant Tupi field. The new Sugar Loaf field is estimated to be five times larger than Tupi and could signal an end to declining oil production around the world.

State-run Petrobras said the Sugar Loaf field could produce up to 40 billion barrels of oil. With several multinational petroleum companies lining up to explore the region, Brazil felt it necessary to assert sovereignty over the wider region, officials said.

Brazil became a net exporter of oil in 2009 and has already indicated it wants a permanent seat on the U.N. Security Council as the de facto regional leader, a position that will give it more clout to set new precedents on what constitutes a nation's offshore borders.

Brazil's Latin American neighbors Argentina, Chile, Peru, and Ecuador earlier extended their rights to a distance of 200 nautical miles to cover their Humboldt Current fishing grounds but Brazil intends to go beyond that distance, analysts said.

The government has already made clear that prospecting outside the currently recognized continental shelf also requires its approval.

The navy order is the second Brazil attempt at extending its offshore border. In 2004, Brazil sought to increase control over offshore resources but was turned down by the United Nations. A new request along similar lines is expected to be tabled at the United Nations soon.

Brazil's diplomatic push for regional pre-eminence has coincided with its economic growth. The economy is set to expand 7.34 percent in 2010.

The economy grew 1.2 percent in the three months through June from the previous quarter, compared with a 2.7 percent expansion in the first quarter, the national statistics agency said. The country's gross domestic product grew 8.8 percent from a year earlier.

Central Bank President Henrique Meirelles said the current pace of economic growth would slow later this year and in 2011 to a level consistent with long-term equilibrium.

"The central bank is comfortable with this growth, which is absolutely in line with predictions," Meirelles said. "We expect, looking ahead, moderate growth in the third and fourth quarters, leading to a level of economic growth around its long-term equilibrium rate."

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