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Petrobras target of US National Security Agency spying

The US National Security Agency spied on Brazil's state oil company, as well as a number of other high-profile corporate targets

The US National Security Agency (NSA) spied on Brazil's state oil company Petrobras, as well as a number of other high-profile corporate targets, Brazilian news outlet Globo reported, citing materials leaked by former NSA contractor Edward Snowden. No details were released on what sort of information the NSA might have been targeting at Petrobras.

The US government, though, has taken a keen interest in the rise of Brazil's oil industry over the past decade after a series of major offshore pre-salt discoveries.

Energy was a hot topic when Brazilian president Dilma Rousseff visited the US in April last year. "The United States is not only a potential large customer to Brazil, but we think that we can cooperate closely on a whole range of energy projects together," US president Barack Obama said at the time.

Rousseff agreed. "Oil and gas pose a tremendous opportunity for further cooperation both as regards the supply of equipment and provision of services, and also as regards a wider role in our trade relations," she said.

But news that the US is apparently spying on that industry is sure to further sour relations between the countries after it was alleged last week that the NSA had hacked into president Rousseff's email, phone calls and text messages. The scandal has imperilled a planned state visit by the Brazilian president later this year.

The US responded quickly to the report in a bid to keep the conflict from escalating. James R Clapper, Obama's director of national intelligence, said in a statement that the US government was not trying to gain an upper hand for US companies looking to invest in Brazil's oil and gas sector. "What we do not do, as we have said many times, is use our foreign intelligence capabilities to steal the trade secrets of foreign companies on behalf of - or give intelligence we collect to - US companies to enhance their international competitiveness or increase their bottom line," Clapper said.

The US government has accused both China and Russia of stealing economic data from the US government and corporations to acquire new technologies and give their strategic industries a competitive leg up in the global market.

"What we do not do, as we have said many times, is use our foreign intelligence capabilities to steal the trade secrets of foreign companies"

Years of intensive research and billions of dollars of investment have made Petrobras a global leader in deepwater drilling and oilfield development technologies, particularly for exploiting pre-salt reservoirs. Petrobras is also leading development of a number of major projects that are expected to contribute about 2 million barrels a day (b/d) of new production to the global market over the next decade. That development, though, has been plagued by a range of issues from skills shortages to infrastructure constraints, and the company's ability to execute its plans has been one of the most hotly debated questions in the global oil industry in recent years.

Clapper defended the spying, and certainly gave no assurances that Petrobras and other companies would not be the targets of future espionage. "The intelligence Community's efforts to understand economic systems and policies and monitor anomalous economic activities is critical to providing policymakers with the information they need to make informed decisions that are in the best interest of our national security."

Repercussions

Many in the Brazilian government and at Petrobras will no doubt scoff at the notion that spying on the state oil company is needed to protect the US' national security. But it is not clear if the report will have repercussions for US investors in Brazil's oil industry.

In October, the Brazilian government is auctioning a stake in the huge Libra pre-salt oilfield, which is estimated to hold between 8 billion to 12 billion barrels of oil. It is one of the largest proven oilfields ever to be put up for bidding and is expected to draw multi-billion dollar bids from Petrobras, Western majors and Asian national oil companies.

The Libra auction will be followed by a bid round offering vast swathes of onshore acreage that could hold significant potential for shale gas. Brazil is thought to hold some of the largest shale gas and oil deposits in Latin America, but it does not have the technology to exploit them. US companies, especially service providers such as Schlumberger and Halliburton, would likely play a major role in any development of Brazil's shale resources.

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