THE ASSOCIATED PRESS

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RIO DE JANEIRO, Brazil - Brazil will spend C$170 million by the end of next year on the development of a nuclear-propelled submarine to protect the oil reserves found recently off its coast, the defence minister said Friday.

The vessel - which officials hope to be complete by 2020 - would be the first nuclear-propelled submarine in Latin America. Brazil does not have nuclear weapons.

The submarine is the highlight of the Brazil's new defence plan - to be made public on Sept. 7.

Brazil is believed to be preparing to spend US$3.5 billion by the end of 2010 to upgrade its weapon systems, according to reports in the local media.

Speaking in Rio de Janeiro on Friday, Defence Minister Nelson Jobim said the upgrade includes provisions for a massive technology transfer from France - essential if Brazil hopes to have a nuclear submarine.

In February, French President Nicolas Sarkozy said France would transfer technology to Brazil for construction of the diesel-powered Scorpene attack submarine. It will serve as a model for a nuclear sub, Brazilian officials have said.

Brazil has discussed building a nuclear submarine for decades, and began a formal program in 1979. President Luiz Inacio Lula da Silva last year announced C$575 million in new funding for the program and for existing uranium enrichment efforts.

The nation has five conventionally powered submarines.

Brazil has been ramping up its defence capabilities as worries mount that its oil reserves - which some estimate at 55 billion barrels - and the potential riches of the Amazon could prove tempting targets to other nations.