Brazilianization with Foreign Ownership: Oil Nationalism or New Policy?

When oil was found offshore in Brazil during the late 1960s, the country early established a policy whose one important aim was to use the sector to develop the national industry.  Untill the early 1980s Brazil had some success in doing that. However, due to the debt crises, followed by strict neoliberal economic policies ­­- imposed to a large degree by international institutions such as the IMF and the World Bank – and misuse of funding schemes for national companies, all efforts to build a local industry around the oil sector collapsed. From the late 1980s to the 1990s the shipyard industry that used to be active in building offshore installations was practically decimated. But the early 2000 Brazil managed to counter this trend by a massive effort to build a new local industry around the offshore oil sector. This paper will discuss whether this can be explained by a change of policy, or if it first and foremost was an effect of a stronger negotiation position because of large new finds and higher oil prices. In part of the literature the changes in Brazil’s oil policy after 2000 has been described as part of an international trend labeled as oil nationalism or petroleum nationalism. The term oil nationalism has most often been used to describe oil policy in countries like Venezuela and Russia, where former privatized entities have been renationalized and where total government share has been increased. Others have described Brazil’s path as a way of Reinventing state capitalism. For sure the partly privatized, but still state controlled, oil company Petrobras has played a particular important role in reinventing the Brazilian oil industry. However, as this paper will show, the local content policy is very different from earlier protectionist regimes in Brazil. The Brazilianization of the industry has so far most often happened inside established, foreign owned multinational supply companies. At the same time, many of the political reforms in the regulatory system related have been inspired by oil policy in Norway. Norway has been known for entering the world of oil, without destroying the social fabric in a society where equality was a strong norm. With an eye to the parallel development of the oil sector in Norway the paper will discuss whether Brazil’s local content policy have had a similar effect.