Brazil on the Rise

Currently in 3rd place in terms of Latin American oil production, Brazil promises to soon overtake regional leaders Mexico and Venezuela.

According to the Wall Street JournalGoldman Sachs and the International Energy Agency, Brazil’s state-run energy company PetroBras has recently increased capital investment plans with a goal becoming one of the world’s five largest oil producers.

Mexico continues to lead Latin American in oil production but output is declining at a rate of 7 to 8% a year as the country’s main oilfield becomes less productive.

Venezula’s production is suffering from insufficient investment, billions of dollars of unpaid bills to suppliers and mandated cuts as a member of OPEC.

Meanwhile, Petrobras plans to double current production levels by 2020 with over one-third coming from newly discovered offshre oil fields.

For ETF investors, the largest fund focused squarely on Brazil is the MSCI Brazil Index Fund (EWZ).  The $4 billion fund is market cap weighted and tracks the Brazilian equity market.

Nearly 25% of the fund is in PetroBras with another 18% in the world’s leading producer of iron ore Vale do Rio Doce.

For more, see Investing in Brazil with ETFs.