New oil finds in the Tupi field off the coast of Rio de Janeiro have initiated a protracted debate about whether the government should create a new state owned oil company to feed revenue into social programs. An Economist piece summarises the debate here. Petrobras, still 40% State owned…

and a world leader in the type of deep water oil extraction needed in this instance, would no doubt like a swift resolution of this proposal. With Petrobras’s board chaired by Dilma Rousseff, widely tipped as Lula successor,  local elections looming this issue is looks set to continue to divide opinion for some time. Meanwhile  analysts report a slowdown coming next year,  as reported in today’s FT :

It reminds me of Europe earlier this year. Everyone thought they could escape [contagion from the US subprime crisis]. Then suddenly it became clear they couldn’t.”

Is now the time for indecision to be affecting the county’s leading corporation, pulling down the Bovespa and worrying investors? Or is it time for oil and welfare to come together in light of difficulties that lie ahead?

Almir Barbassa, CFO of Petrobras, talking on Bloomberg about oil price and future supply and stock price  after their last earnings report (12/08)