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Black Gold Investment in Brazil

Part of the attraction of investment in Brazil is its vast quantities of natural reserves. These include huge oil fields set to become a major investment draw in Brazil this year.

Brazil's main oil company, Petrobras has just announced that it will be investing up to 26% more in Brazil's oil fields over the next five years. Petrobras' Brazil investment will run to between US$200 billion and US$220 billion from now until 2014. This investment will be the largest this year made by any oil company including oil giants such as Shell and Exxon Mobil.

Petrobras will be increasing its capital by issuing up to US$40 billion in new stock, most of which will go to the government of Brazil in return for oil rights. Petrobras will use the capital to focus on the development of Brazil's massive oil fields, particularly those in the Tupi area.

The Tupi and Lara fields, situated 800km off the Brazilian coast, are home to America's largest discovery of crude oil deposits since the Cantarell fields were found in Mexico in 1976. The fields in Brazil have huge potential and are estimated to hold up to 10 billion barrels of oil. The Financial Times refers to the reserves as "Brazil's ticket to the world's VIP energy club".

Pre-salt exploration of the Tupi fields will be finished by 2016, allowing exploitation of the fields. Oil income will boost Brazil's economy considerably over the next decades and will contribute substantially to the rise of Brazil as an international economic power. Analysts predict that between 2020 and 2025, Brazil will be the world's fifth largest economy (it currently ranks in tenth place).

Petrobras expects to release new stock in the second quarter of this year. The seventh largest oil company in the world, Petrobras saw quarterly profits rise by 31% in Q4 last year. Over the last 12 months, the company's market value has increased 72% on the Brazil stock exchange, the Bovespa index.

Investment in Brazil stocks saw huge hikes last year and 2010 also looks promising. BlackRock, an asset management firm, predicts a 22% rise on Brazil stocks this year. Investment in Brazil oil stocks should bring good returns, although BlackRock favours investment in Brazilian real estate companies such as Cyrela, the country's largest.

For Obelisk, the Petrobras announcement further confirms the potential of investment in Brazil. This is a country of huge opportunity - whether you choose to invest in stocks and shares, energy, agriculture or real estate, Brazil has all the right ingredients to increase the wealth of your investment portfolio.

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