Brazilian Oil Giant Petrobras Spends $9.5 Billion For Security After NSA Espionage Scandal

Brazil did not take lightly the revelations of Guardian journalist Glenn Greenwald about the U.S. government spying on Brazilian politicians and businesses. First, President Dilma Rousseff cancelled her official visit to the White House, and now, oil giant Petrobras (NYSE:PBR), which was also a target of the surveillance, is reacting by strengthening its data protection.

The state-owned company said on Thursday that it was investing 21 billion reals ($9.5 billion) over the course of five years to improve data security, reported the Financial Times.

“This is a policy that is so important it has been personally approved by the board of directors,” said Maria das Graças Foster, Petrobras president, during a forum in Rio de Janeiro. “The management of our goods, people, information and the wealth we create is of crucial importance.”

The issue could have business consequences beyond Petrobras. Communications Minister Paulo Bernardo said that the government is pushing a bill that would require all data exchanges based in Brazil to include locally made equipment, which would impact foreign suppliers.

The bill would also seek to make international companies, like Google (NASDAQ:GOOG) and Facebook (NASDAQ:FB), keep all data concerning Brazilians within Brazil, using servers physically in the country. Foreign companies would have to adhere to Brazilian privacy laws.

It is still unclear how the U.S. has used the information extracted from Brazil. The Brazilian Senate expressed worry that the NSA would give out data to American companies so they would have an edge in bidding for a large offshore oil field next month.

However, Foster said on Wednesday that there was no evidence that Petrobras’ computers had been hacked to that end. Reuters reported that the head of the oil company said the surveillance was “disturbing,” but she assured the Brazilian Senate that the data that could have been used toward an unfair advantage in the auction of the Libra field, scheduled for Oct. 21, does not travel by Internet -- and most of it is public information anyway.

Analysts worry that these recent decisions, together with Rousseff’s canceled visit, will hinder relations between the U.S. and Brazil, which had slowly improved since Rousseff took office in January 2011.

João Augusto de Castro, analyst with Eurasia Group, said there was little room for positive overtures between Brazil and the U.S. at this point, but things might not be as bad as feared. “Brazil cannot afford a trade war with the U.S., with its high inflation and other economic problems,” he told Financial Times. “I don’t see Brazil following through on some of the threats, especially toward Internet companies.”