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Is the pre-salt oil competitive? Economic and environmental long run impacts from the incentives to the pre-salt – a general equilibrium approach

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  • Moraes, Maria Juliana Iorio de
  • Gurgel, Angelo
  • Paltsev, Sergey

Abstract

Introduction The Brazilian oil production reached 2.1 million of barrels per day in 2012 and 2013 and the projections are to more than double until 2020. Petrobras expects more than 40% of this production to come from the oil resources under the pre-salt layer. The estimated reserves of oil and natural gas from the pre-salt amount 50 to 70 billion barrels of oil equivalent, and, if proved, will position the country among the top ten nations in the world in terms of oil reserves. To turn these projections in production, the investments in capital will be massive. The shock expected from pre-salt oil production has gained attention, since considerable empirical, but not conclusive, evidence in the literature suggests a negative correlation between an abundance of natural resources and economic growth (Rosser, 2006). In addition, another important issue is related to the environmental concern regarding the increase of production and use of fossil fuel energy sources and the associated effect of greenhouse gas (GHG) emissions. In the National Plan for Climate Change (Plano Nacional sobre Mudança do Clima – PNMC) a reduced Brazilian contribution to global emissions, both in relation to emissions per capita and emissions per area, is highlighted (Law 12.187, 2009). However, Brazil’s commitment to seeking a dynamic economy, whose emissions trajectory does not follow the trend of already industrialized countries with respect to GHG emissions, is emphasized in the same document. The success in the development of the pre-salt oil production will depend on the oil price in the incoming years, on substantial investments and on the country efforts to reduce its CO2 emissions. Considering such challenges and the importance of the oil sector to the country economy, this study aims to evaluate the competitiveness of the pre-salt oil and also to estimate the macroeconomic, sectoral and environmental impacts in the long run from the expected expansion in the Brazilian oi...

Suggested Citation

  • Moraes, Maria Juliana Iorio de & Gurgel, Angelo & Paltsev, Sergey, 2015. "Is the pre-salt oil competitive? Economic and environmental long run impacts from the incentives to the pre-salt – a general equilibrium approach," Conference papers 332642, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:332642
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    1. Haddad, Eduardo & Giuberti, Ana Carolina, 2011. "Economic Impacts of Pre-Salt on a Regional Economy: The Case of Espírito Santo, Brazil," TD NEREUS 10-2011, Núcleo de Economia Regional e Urbana da Universidade de São Paulo (NEREUS).
    2. Rutherford, Thomas F, 1999. "Applied General Equilibrium Modeling with MPSGE as a GAMS Subsystem: An Overview of the Modeling Framework and Syntax," Computational Economics, Springer;Society for Computational Economics, vol. 14(1-2), pages 1-46, October.
    3. Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685, December.
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