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Brazil oil giant, Petrobras, in corruption spotlight

A congressional inquiry could taint not only the state-owned company but Brazil's president and the woman he hopes will succeed him.

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Brazil's congressional inquiry into corruption inside the state-controlled oil company promises sleepless nights for those involved, any number of scandals, and months of political theater that threaten to taint Petrobras, the government of Luiz Inacio Lula da Silva, and the woman he hopes will replace him as president.

The Parliamentary Commission of Inquiry, known by its Portuguese-language acronym CPI, kicked off Thursday and comes at an annoying time for Petrobras, one of Brazil's biggest and best-known companies. In 2007 and 2008 it discovered huge new fields that contain estimated reserves of between 8 and 12 billion barrels of oil. The finds were the biggest in the world for almost a decade.

The oil is stuck below more than 5,000 meters of water, rock, and salt. It is expensive and logistically problematic to extract, but the sheer volume of the fields – and their presence in a country that is stable and has not nationalized petroleum and gas firms – has turned Petrobras into the oil world's new darling.

Companies such as Exxon Mobil, Britain's BP, and Spain's Repsol have come to Brazil to do business with Petrobras, and thousands of smaller firms have joined the black gold rush. While the rest of the world cuts costs, Petrobras is upping its investment and has vowed to spend $174.4 billion between now and 2013.


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