BRAZIL: Glad Tidings of Oil

Brazil's inflation-harried, dollar-starved government heard good news last week from the jungle interior. Near the spot where the Madeira River flows into the Amazon, oil hunters brought in a high-grade gusher, the first oil ever found in Brazil outside the coastal state of Bahia. The oil spurted 150 feet, and made Brazilians gush just as effusively. Said Rio's Correio da Manhá: "Glad tidings! The greatest hope for Brazil's recovery."

The tidings were all the gladder because oil is one of Brazil's sorest problems. The wells in Bahia produce only 1,500,000 barrels a year, less than 3% of Brazil's consumption. Oil imports, which must be paid for in dollars, gobble up much of the dollar exchange Brazil earns from its coffee exports. But instead of welcoming foreign oil capital, Brazil has barred it with nationalistic laws. The government oil monopoly, Petrobras, can legally hire the services of foreign experts and drilling companies, but it cannot grant concessions or sell shares to foreigners. Because of this self-inflicted shortage of capital and know-how, the Brazilian search for oil has been painfully slow. Last week's strike, made with the help of a Texas drilling firm hired by Petrobras, eased the pain. By itself the well is only a drop in the barrel of Brazil's oil needs. But it lies in a vast, geologically uniform sedimentary basin, and heralds—or so Brazilians hope—many Amazonian gushers to come.