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If this is Thursday, it must be…Brazil.
I returned home late last night from Baltimore where we were putting the final touches on one of the best energy investments yet, a huge new precedent-setting play we'll be releasing very shortly.
But my wife Marina and I are now into a very hectic travel schedule.
As you read this, we are on the first flight leg down to Rio de Janeiro. We are returning on Thanksgiving, only to turn around the next day and be off to Moscow. (Otherwise we would have had to pack for two very different climates!)
There are more trips in December. And I am not even thinking about what's happening in January and February yet.
The reason behind this travel frenzy is the rapidly changing global energy balance. It's one that will require a revision in our overall energy outlook.
All of which will allow us to bring you some of the best energy investments around – a series of profitable new moves.
However, back to Brazil and the reason behind my meetings this weekend…
Brazilian Energy Is About to Get Hot
Brazil is a major oil producer, with new prospects in its offshore pre-salt formations and exciting new discoveries in Amazonia (yes, the region way upriver in the jungle). Expectations now are that these discoveries will allow Brazil to leapfrog other countries on the global production list.
Then there are also the major developments on the downstream fuel side. Brazil has been the world leader in the application of ethanol. In fact, more vehicles run on ethanol there than anywhere else in the world.
Cars in Brazil have options and their engines are fitted to allow for a range of mixtures. This is ethanol processed from sugar cane, not corn (as is the case in the bulk of U.S. production). It is also hydrous, meaning it has water.
That is not a problem in Brazil, but would be in much of the U.S. market. It is never a good idea to have water moving through a fuel line during cold spells or winter months. Ice doesn't make a very good power source!
Nonetheless, it would appear that what is happening in Brazil might be a signaling what can be expected elsewhere in the energy sector. At least, that is what most of the pundits (who have never been there) tout in what they pass off as analysis.
Personally, I believe there are some real opportunities developing. However, there are also some significant balancing difficulties emerging right along with it. And as those of you who have been reading Oil & Energy Investor for a while know, people usually call me in when there are problems.
Brazil is no different, although the interruptions there are likely to have a more pronounced effect on world markets. With major gas finds in Argentina and Columbia, a slow return of Venezuelan heavy crude production, and prospects for some of the longest pipeline networks in the world, Brazil sits right in the center as a major new cross-border energy player.
The interconnection coming among major continental producers is creating the advent of a new cartel, an OPEC of sorts for South America. The impact that is likely to have on pricing internationally is only now being estimated.
And that is the reason for my trip…
About the Author
Dr. Kent Moors is an internationally recognized expert in oil and natural gas policy, risk assessment, and emerging market economic development. He serves as an advisor to many U.S. governors and foreign governments. Kent details his latest global travels in his free Oil & Energy Investor e-letter. He makes specific investment recommendations in his newsletter, the Energy Advantage. For more active investors, he issues shorter-term trades in his Energy Inner Circle.