Renato Bertani holds a bachelor’s degree in geology from the Federal University of Rio Grande do Sul, and a master’s and doctorate from the University of Illinois. He joined Petrobras in 1984 as a district manager. In 2001, after a three-year stint in London as managing director of Petrobras UK, he became president of Petrobras Americas. Earlier this year, he was named the CEO of Thompson & Knight Global Energy Services, a subsidiary of the Thompson & Knight law firm that is dedicated to providing energy-business development services to worldwide clients. He corresponded with ET’s Robert Bryce in late April via e-mail.

ET: Over the past decade or so, Petrobras has been one of the most successful national oil companies in the world. What are the key reasons for its success?

RB: I think there are two main reasons for Petrobras’s success: investment in people and in research. Petrobras has historically been committed to developing and training its professionals, including sponsoring its most talented employees in overseas degree programs. The same is true with research. Petrobras is one of the few petroleum companies with a continuous long-term research program in key areas such as deepwater exploration and development, enhanced recovery, refining and fuel quality, etc. Last year, Petrobras invested around $300 million in pure research, a significant figure matched by only a few major companies.

ET: In talking with other people in the industry about Petrobras, they frequently mention the company’s technical prowess. They mention its abilities in geology and geophysics as well as its subsea and offshore hardware. How was Petrobras able to develop this edge in technology while other national oil companies have not?

RB: Petrobras professionals have been trained to dare, but that is done on the basis of sound technology. And the company also has an obligation to its shareholders to be profitable. We cannot forget that even though the Brazilian government owns the majority of the voting capital, over 70 percent of the total shares (voting and non-voting) belong to private investors.

ET: You helped lead Petrobras’s expansion into the Gulf of Mexico even though Petrobras had plenty of offshore opportunities in Brazilian waters. What did Petrobras see in the Gulf of Mexico that made it expand there? And why was Petrobras able to see opportunity in the Gulf when other companies did not?

RB: We decided to pursue a vigorous growth strategy in the Gulf of Mexico because, above all, we saw opportunity to grow and create material value for our shareholders. That required innovative thinking, cutting-edge technology, and willingness to take and mitigate risks. As I said above, all [are] elements that are part of the company culture.

ET: When it comes to deepwater exploration and production, how does Petrobras stack up against the supermajors like Shell, Exxon Mobil, and Chevron? Is it as good? Better? If it is better, is there one area or technology in which Petrobras does a better job than its peers?

RB: I do not like to compare companies in those terms. In our industry there is strong competition, but there is also opportunity for cooperation between companies. All of the big players that you mentioned, and many others, have tremendous skills and have developed solutions to tackle challenging operational environments. The way I see it, in some areas Petrobras has many contributions to offer, and in others it will be on the receiving end. And vice versa with the majors.

ET: The limits of deepwater technology keep getting extended. Petrobras and other companies are now routinely exploring in 3,000 meters of water. Do you see a limit in terms of how deep oil companies can go? If so, what is it?

RB: In my view the limit will be established by the deepest oil or gas accumulation. We do not expect relevant accumulations to occur in the abyssal depths of the ocean simply because the sedimentary sequences get too thin farther and deeper offshore, therefore precluding the existence of the right conditions for effective petroleum systems to exist.

ET: When you were at Petrobras, you were part of the team that negotiated the acquisition of a 50-percent stake in the old Crown refinery in Pasadena, Texas. Why is it important for Petrobras to have a downstream presence in the U.S.?

ET: Pemex and other national oil companies have often been constrained by politics. That is, politicians have often interfered in the operations of the NOCs in oil-rich countries. (Look at PDVSA and Hugo Chávez.) Why has Petrobras been so successful in escaping the political dramas? And, will the company be able to keep the politicians at bay?

RB: As indicated above, Petrobras management has a fiduciary responsibility with its shareholders to be profitable. The company has been managed with that goal and, in my view, will continue like this.

ET: In early April, Petrobras announced that it was going to spend $1.6 billion to increase production of ethanol in Brazil. From a purely business standpoint, wouldn’t Petrobras be better served by putting that cash into the oil business?

RB: In my view biofuels, particularly ethanol, will contribute with a relatively modest contribution in meeting the world’s growing energy demand. But I emphasize “relatively” because, even if that contribution is less than 10 percent of the total energy consumption, nonetheless it offers huge investment and profit opportunities. Brazilian ethanol is extremely competitive, and [for Petrobras,] being an energy company [and] not stranded by capital limitations, I see a good strategic rationale in that decision.

ET: There has been a lot of talk in the U.S. about Brazil’s energy “miracle.” How much of the miracle was due to ethanol and how much was due to Petrobras’s ability to make the country independent in terms of crude oil imports?

RB: The main factor for Brazil’s energy self-sufficiency was certainly the tremendous growth of the domestic oil production. Ethanol also played a significant role, but proportionately less so than the oil contribution, in meeting the domestic energy demand.

ET: Many energy companies are facing acute shortages of trained technical personnel. Are the same problems facing Petrobras? If so, how is the company dealing with it? Along those same lines, are Brazilian universities producing enough of the kind of talent – engineers, geologists, chemists – that Petrobras and other big energy companies need?

ET: What are your thoughts about peak oil?

RB: Like forecasting oil prices, the question of peak oil requires a crystal ball. But I will take a chance and give my opinion. I think that we are going to see a plateau rather than a peak. And what will determine the level of that plateau, is economic constraints. Save for a major technological breakthrough, I see oil demand being met over the next decades. Fluctuations and local disruptions are unavoidable, but over the long term the old economic supply and demand balance will prevail.

ET: You’re now working on the energy-services side of the business. Some people believe that the NOCs, by teaming with the service companies, will provide the key challenge to the supermajors over the long term. Will the supermajors be able to keep up with the NOCs? Are they natural allies, or rivals?

RB: The distinction between NOCs and IOCs is becoming increasingly fuzzy and Petrobras is a typical example. We are already seeing all sorts of partnerships involving NOCs, IOCs, and service companies. The distinction will be more in terms of companies, or partnerships, that prefer to operate in smaller niches, versus the global players, rather than based on the traditional separation of state and privately controlled companies.