Petrobras Empowers Turkey

Brazilian President Luis Inacio “Lula” da Silva capped his three-country tour in late May with a three-day visit to Turkey. The first Brazilian president ever to visit Turkey, Lula arrived with an entourage of businessmen and diplomats.

This last stop cemented a successful foreign policy and trade tour in an unlikely, yet potentially powerful, partner.

Turkey is a rising star on Europe’s eastern flank. Long respected as a cornerstone partner within NATO, Turkey rests on the saddle between Europe and the Middle East. Apart from control over strategic access between the Black Sea and the Mediterranean, Turkey seeks to become a major energy hub for Middle Eastern and Central Asian oil and natural gas destined for European markets.

Enter Brazil. During Lula’s recent series of meetings in Turkey, Brazilian energy company Petrobras inked a deal with Turkey’s national oil company, Turkey Petroleum Corporation (TPAO). Due to Petrobras’ drilling and extraction experience in deep-sea environments, the Brazilian company is well poised to assist TPAO with a series of projects in the Black Sea. Together, the companies expect to invest as much as $800 million in a joint venture that should begin drilling by early 2010.

This deal enables Turkey to absorb the technological capabilities required to tap off-shore reserves, and possibly extend its presence and influence, across the Balkans and Caucasus. Brazil has effectively assisted the country to move towards energy independence while increasing its profile within regional energy markets.

The recent deal with Turkey expands Petrobras’ presence in the region, and over time will go a long way towards establishing the company as one of the world’s leading energy firms, rather than a national oil company.

As the final days of Lula’s second presidential term approach, his focus remains on using trade partnerships and energy deals to raise Brazil’s international profile.

Turkey’s trade with Brazil hovers at $1.5 billion a year: a low number that gives both countries room to grow. Brazil, however, remains Turkey’s top trading partner in Latin America, and once established, the Turkish consulate in Sao Paulo and a Brazilian consulate in Istanbul will be well placed to support plans for expanded cultural ties.

Already, Turkish Airlines flies routes from Istanbul to Sao Paulo.

Back in Brazil, Lula commented on his recent visits to Saudi Arabia, China and Turkey during his weekly radio show, “Breakfast with the President.” Brazil cannot wait for the buyers to knock on its door, Lula said. “We sellers must go and knock on others’ doors.”

It is a strategy that will likely take Lula into regions where previous Brazilian presidents have not had the time nor the political will to visit. Lula, however, sees himself as an international diplomat and as Brazil’s best representative on the international stage. Fortunately for Turkey, Lula brought Petrobras along with him. As a global energy company, Petrobras will remain Lula’s fulcrum for leveraging Brazil’s reach and influence around the world.