Introduction

Petrobras stands out as a particularly successful national oil company (NOC). One of the world leaders in deep water oil exploration and production, Petrobras has a dominant position in the Brazilian oil and gas market and has a small but growing presence abroad as well. Its dominant position in Brazil and strong performance, along with other factors that the company itself doesn’t control such as the high price of oil, explain why its market value grew from $26.4 billion in 2000 to $173.6 billion in August 2009. It is currently Latin America’s largest publicly traded company. Among its peers – both NOCs and the international oil companies (IOCs) – the company is widely seen as a well-managed, efficient leader in the industry.

Created in 1954, as a result of a congressional decision in the previous year to create a state monopoly in the Brazilian oil industry, Petrobras started its operations with no meaningful oil reserves or much expertise in producing, refining, and marketing oil or refined products. Unsurprisingly, oil experts were skeptical about the future of the newborn company.