Petroleo Brasileiro SA, or Petrobras, as it's better known, Brazil's state-controlled oil producer, is on a $112.7 billion expansion spree, which may allow Brazil to overtake the output of all OPEC members except Saudi Arabia.

It plans to acquire refineries that may make the company the world's third-largest seller of gasoline and diesel. Additionally, it plans to add 14,000 engineers, geologists and drillers within three years. And finally, it is close to issuing letters of intent for as many as 17 new offshore drilling rigs. Letters of intent are preliminary agreements issued before a final contract is awarded.

A major reason behind this mammoth expansion is the discovery of major oil fields in recent times. The Tupi oil field, in the Santos Basin, is estimated to have a volume of approximately 5 billion to 8 billion barrels, and was discovered in November last year. These estimates catapulted Tupi to the position of the world's largest new oil source since Kashagan in Kazakhstan in 2000. However, Brazil's good fortunes didn't end there.

On 21 January this year, Petrobras announced the discovery of Jupiter, a huge oil field that could equal the Tupi oil field in size. It is located 37 km from Tupi, 5,100 metres below the Atlantic Ocean and around 290 km from Rio de Janeiro. But the biggest fin was yet to come.
 
On 14 April, the director general of Brazil's National Petroleum, Natural Gas and Biofuel Agency (ANP), Haroldo Lima, announced that Petrobras discovered a "mega field" of oil and gas at the Santos Basin, in the southeastern Brazilian Coast.

According to Lima, the Carioca field is located near the Tupi field discovered last year. He stated that the new field contains reserves estimated at 33 billion barrels of oil equivalent (petroleum and petroleum gases). This would make it the third largest oil field in the world, with reserves expected to last a century and a half.

As a result of these huge finds, Petrobras is looking to expand its infrastructure to meet processing requirements. This week, investment bank UBS estimated that the Tupi and Carioca finds off Brazil would need about $600 billion to develop, a massive windfall for oilfield services companies all over the world.

CEO Jose Sergio Gabrielli said that the board of directors would be meeting on Tuesday to discuss buying a Valero Energy Corp. plant in Aruba that would boost refining capacity by 14 per cent. He added that the company is also looking for more purchases.

The Aruba plant can process 275,000 barrels of oil a day and includes two delayed coking units, which handle heavy crude similar to the grades in Brazil's offshore deposits. Valero had acquired the plant four years ago for $627 million.

The offshore fields underpin Gabrielli's plan to increase output 79 per cent by 2015 to the equivalent of 4.2 million barrels of oil. If the company maintains its current proportion of crude and natural-gas production, it will have about 3.5 million barrels of oil a day to refine.

Petrobras owns stakes in 18 refineries that process about 2 million barrels of oil a day, or 85 per cent of current output. Comparatively, its two largest competitors, Exxon Mobil and Shell process around 5.6 million barrels and 3.8 million barrels of crude a day.

Petrobras also plans to expand its workforce 23 per cent to about 74,000 to cope with the increased workload. Again, as a comparison, Exxon and Shell have 80,000 and 75,000 employees on their roles respectively.

The company intends to recruit all of its new employees from Brazilian universities and technical schools, said Gabrielli. Petrobras is the company of choice for Brazilian university graduates because it offers training and ''lifetime careers,'' said Guilherme Estrella, who heads the company's exploration and production business. ''That's our tradition at Petrobras, so we have a very good image,'' he told reporters yesterday at an industry conference in Houston.