"More than actually putting a man on the moon"
According to Pedro Cordeiro,a partner at strategic consultancy Bain & Company's São Paulo office: “This could be the largest private sector investment programme in the history of mankind - more than actually putting a man on the moon."
He added that: " Not counting new concessions, you will have $1,000bn of investment over the next 10 years. It’s huge.”
That investment will catapult Brazil past the likes of China and the United Arab Emirates, cementing the country as the world's fifth largest oil producing nation, only behind Russia, Saudi Arabia, the USA and Iran.
The role of local content in staving off the "Dutch Disease"
In 1977, The Economist coined the phrase the "Dutch Disease"to define the relationship between the increase in exploitation of natural resources and a decline in the manufacturing sector, as experienced by the Netherlands after the discovery of the Groningen natural gas field in 1959.
Many believe that Brazil's pre-salt reserves will catapult the country from an agriculturally-based emerging third world economy to a first world economy in a matter of years. It is precisely that kind of sudden and prodigious growth that finds disturbing parallels in Holland's eponymous syndrome.
To stave off the disease, there are those that think an antidote can be found in the imposition of strict local content policies - that is to say, binding rules that maximise national participation in oil and gas projects through building a skilled native workforce and a competitive supplier base.
The rigs, platforms and tankers that will service and harvest Brazil's reserves in the coming years will be constructed using local suppliers, manpower and facilities instead of outsourcing to third party companies that do not feed directly into the local/national economy.
With theoil industry projected to grow from one tenth of Brazil's GDP to one quarter in the coming decades, this could mean a Klondike Gold Rush effect for Brazilian industry, entraining an internal stampede of labour and commerce, with the door firmly closed on extraneous parties.
Local content: modern day protectionism vs. competitive capitalism...