Petrobras to Start up Taps in Late 2010

Brazilian Basins

Petrobras has christened, at the Brasfels shipyard, in Angra dos Reis (RJ), the P-57 vessel platform, which will operate in the Jubarte field, in the Espírito Santo portion of the Campos Basin, 80 km off the Espírito Santo coast. This unit opens the way for a new generation of platforms, designed and built based on an engineering concept that focuses on streamlining projects and standardizing equipment. This is a model that will be a reference for future Petrobras platforms, such as the P-58 and P-62, and for units that will operate in the Santos Basin pre-salt cluster.

The P-57 is an FPSO- (floating production, storage, and offloading) type platform, and is part of the second phase of development for the Jubarte field. Anchored at a water depth of 1260 meters, it will produce oil of 17 degrees API (a measure of the oil density). The platform will be capable of processing up to 180,000 barrels of oil and 2 million cubic meters of gas per day. It will go on stream later this year interconnected to 22 wells, 15 of which producers and seven water injectors. It will be the first unit of this complexity to operate on the Espírito Santo coast.

Production is expected to peak by early 2012. The oil it produces will be transferred on shuttle tankers to land, while the gas will flow through an undersea pipeline to the Sul Capixaba Gas Treatment Unit, located in the region of Ubu, in the town of Anchieta, which is located at about 100 km from Vitória.

Technological innovations

The P-57's production system is equipped with a new technology to collect 4D seismic data, permanently installed on the seabed. This solution will afford greater flexibility in obtaining seismic data while improving reservoir interpretation quality, and, thus, optimize production. The unit will also adopt an innovative method to lift the oil that is in the reservoir up to the platform. The approach consists of a centrifugal subsea submersible pump (BCSS) installed in a special compartment on the seabed, separated from the producing wells. This design will allow for cost reductions in the event of equipment repair.

Engineering challenges

The engineering, procurement, and construction contract for the P-57 was signed in February 2008 with Single Buoy Moorings Inc. (SBM). The platform's hull was converted from the Island Accord oil tanker at the Keppel Shipyard, in Singapore, between October 2008 and March 2010. Simultaneously, the oil and gas processing modules were built in Brazil, at the UTC Engenharia construction site, in Niterói (RJ), and at the Brasfels shipyard, in Angra dos Reis (RJ). The hull arrived at the Brasfels shipyard last April, when module installation was completed, all systems were interconnected, and the unit's final tests ran.

The construction of the P-57 reached a contractual level of national content of about 68%. The strategy of prioritizing good and service procurement in the Brazilian industry seeking to contribute to the development and expansion of the domestic industry resulted in the generation of over 2,000 direct jobs in the country.

Simplification and efficiency

The knowledge gained from building the P-57 will serve as a model both for the design of the P-58, P-62, and P-63 platforms, and for the "replicant FPSOs" intended for use in the Santos Basin pre-salt area (state of São Paulo). The new unit's design was simplified and its equipment standardized pursuant to the highest operating safety standards. This strategy ensured greater efficiency both in project management and in the progress of the procurement, construction, assembly and testing stages. The result was the strict compliance with contractual terms, the maintenance of the initial planned cost, and the assurance of the quality demanded under the contract. Additionally, the new strategy resulted in a lighter, easier-to-maintain platform, a significant gain, therefore, from the economic, managerial, and technical standpoints.

Pipeline Projects - Etanol Corridor

Brazilian ethanol pipeline projects are budding, but not all will bloom.

In the past few months three major ethanol pipeline projects, through roughly the same corridor of Brazil’s existing and future center-south sugar cane production belt, have been tabled by separate groups interested in extending their downstream footprint in the industry and capitalizing on the growing export potential of the world’s largest cane ethanol producer.

All three investor groups—one representing Brazil’s state oil company, a second the established center-south cane industry and a third deep-pocketed private equity investors—are banking on Brazil becoming the world’s main international ethanol exporter, supplying the North American, European and Japanese markets with their marginal ethanol needs.



Brazil is already ramping up its ethanol production in preparation for expansion into international markets. The local cane crop, which has traditionally expanded about 6 percent a year, has seen annual expansion at more than 10 percent. This year’s crop, however, is expected to grow by 16 percent to more than 550 million metric tons (606 million tons) in an effort to meet growing domestic and international demand. Brazil’s cane sector is expected to attract $17 billion in investment over the next six years by market estimates. Most of this expansion will be directed to ethanol production to supply Brazil’s growing flexible-fuel automobile fleet that now makes up more than 90 percent of all new car sales. Until last year, slightly more than half the country’s cane crop was directed to sugar and the rest to ethanol production. But this season, a full 58 percent of the main center-south’s crop is expected to go to ethanol production, according to the Brazilian Cane Industry Association (Unica).

Although Brazil’s ethanol exports have been relatively flat over the past few years at just more than 3 billion liters (793 million gallons), it will increasingly become a larger ethanol exporter. Ethanol production from the main center-south crop will grow to 24.3 billion liters (6.4 billion gallons) this season, from 20.3 billion liters (5.4 billion gallons) in the previous, and exports should grow to 3.9 billion liters (1 billion gallons) from 3.1 billion (819 million gallons) last season, with the United States continuing to make up for just over half of those volumes. Plinio Nastari, president of cane sector analyst Datagro, says Brazil's ethanol fuel production would have to grow by 3 billion liters (793 million gallons) a year through 2025 to keep up with demand at home and abroad.



“Through 2015, ethanol exports will remain limited to roughly 7 billion liters (1.8 billion gallons)," Nastari says. “But the shift has already begun … as sugar has been the driver of Brazil’s cane industry for several hundred years, so ethanol will now take over as the main force behind cane expansion.”



He estimated that in 2015, U.S. legislation would cap the amount of ethanol from corn and U.S. demand for alternative fuels. That could potentially help boost Brazil's international ethanol sales, which are expected to grow to 25 billion liters (6.6 billion gallons) by 2025. Japan with the world’s second-largest automobile fleet will also be a major importer of Brazilian ethanol, and it is this market that is of interest to Brazil’s state-run oil and gas company Petrobras. The company recently bought a 90 percent stake in Exxon Mobil’s Okinawa oil refinery, and Petrobras’s chief executive, Jose Sergio Gabrielli, says that it may serve as a staging point for Brazilian ethanol exports to Japan and the rest of the fast-growing Asian region. One of the main problems that Petrobras and other major ethanol exporters are facing is the lack of offloading infrastructure in the destination markets.

Other potential markets for Brazilian ethanol include the European Union, which is currently debating its biofuels directive. According to the proposal currently being debated by the European Commission, 10 percent of all transport fuels consumed in the trade bloc by 2020 must be biofuel blends.



Currently, Unica is directing much of its lobbying efforts toward the European Union, which has the potential to import significant volumes of Brazilian ethanol. “There’s a lot of pressure against the biofuels directive and we are focusing on educating people about the virtues of Brazil’s cane-based ethanol,” says Unica President Marcos Jank. “The debate is heated right now, because of concerns about food inflation, but we continue to believe that Brazilian ethanol meets all the requirements of the directive in terms of [carbon dioxide] reduction,” he adds.



Petrobras Partners With Mitsui

Petrobras announced earlier this year that it entered into a joint venture with Japanese trading house Mitsui and local construction company Camargo Correa to build a designated ethanol pipeline that will run from Goias state in Brazil’s center-west to Petrobras’s Paulinia refinery in Sao Paulo state. The venture will be called PMCC Projetos de Transporte de Alcool. The Goias-Paulinia leg is part of an ethanol export corridor which will also eventually include ethanol-only legs between Paulinia and Guararema, which in turn will link up with the coastal terminals in Sao Sebastiao in Sao Paulo state and Ilha D’Agua in Rio de Janeiro state. The line is expected to have the capacity to ship 12 million cubic meters (12 billion liters or 3.2 billion gallons) of ethanol annually.



Brazil has moved ethanol fuel through pipelines for decades with great success but they are multiuse ducts, so the ethanol is tainted with traces of gasoline, diesel and other fuels. That is not a problem for the local fuel distributors but it is for foreign buyers. All ethanol exports in Brazil come to the port by truck or railcar. This is the main bottleneck that will limit the future expansion of Brazilian ethanol exports.



The construction of pipelines is considered key for the export market to expand, according to Antonio de Padua Rodrigues, technical director for Unica. “We estimate that freight costs represent 15 percent of the free-on-board price of ethanol exports between Ribeirao Preto and the port of Santos. With a pipeline, these costs would decline significantly,” Padua Rodrigues adds.



Petrobras has also teamed with Mitsui as a minority shareholder in about 20 separate ethanol plant projects in Brazil but recently said that it is slowing the development of these plants until Japan shows stronger signs of making an E2 blend mandatory in its retail fuel market. It still plans to export 4.7 billion liters (1.2 billion gallons) of the biofuel by 2012. "We are also looking at the South Korean, South African and U.S. markets,” says the company’s supply director, Paulo Roberto Costa.



Roberto Gianetti da Fonseca, an economist who is director of trade at the Sao Paulo Industry Federation (Fiesp), estimates that demurrage cost for ships waiting to load ethanol at Latin America’s largest port of Santos has surpassed $30 million a year because of a lack of sufficient storage capacity. He estimates port ethanol storage capacity needs at about $50 million to $60 million in investments to bring them up to par with current ethanol export levels. “It’s not enough to only think about production, we are leaving out important logistic decisions,” da Fonseca says, alluding to the nearly 90 new ethanol mills that will be coming on line in the next few years. “Ethanol pipelines should have been built yesterday because the ports are already at their capacity limits.”



Petrobras has also secured an agreement from the states of Mato Grosso do Sul in the center-west and Parana, which has one of Brazil’s new ethanol export terminals. Mato Grosso do Sul is also seen as one of the main frontier cane regions. The project is expected to require investments of about R $2 billion (U.S. $1.25 billion). But although the Paranagua export terminal has been in place for a couple of years, it has not yet exported a drop because of regulatory and technical problems.



Petrobras has said it would allow the private sector third parties access to its ethanol pipelines but the company has a bad history in allowing access to its natural gas pipelines, which has prompted private investors to push ahead with their own projects.



Cosan, Copersucar, Crystalsev Form Joint Venture

Petrobras’s entrance into Brazil’s ethanol industry has sent shudders through Brazil’s cane industry, which realizes the benefits the state-run giant can have in opening foreign markets, but also fears its monopolistic and predatory tendencies in the local fuels markets. Almost in response to Petrobras’s pipeline investment announcements, Brazil’s biggest sugar and ethanol producer Cosan soon after formed a joint venture with Sao Paulo Sugarcane, Sugar and Ethanol Producers Association known as Copersucar and sugar and ethanol trader Crystalsev to build a designated ethanol pipeline in the state of Sao Paulo, which accounts for about 65 percent of Brazil’s cane output.



The three giants of Brazil’s sugarcane sector, which are essentially competitors, will make initial investments of R $20 million (U.S. $11.5 million) apiece in the joint-venture company called Uniduto Logistica that will plan and install an ethanol-only pipeline between the oil refinery in Paulinia, in Sao Paulo state to an ethanol offloading terminal on the state’s coast. Other investors may be brought on at a later time, Cosan says, as the project costs are expected to run to R $1.5 billion (U.S. $914 million).



Brenco’s Big Investors

Recent expansion and interest in Brazil’s cane ethanol sector has birthed at least three major private equity groups dedicated to investing in the sector, some of them have raised money by floating shares on the London AIM exchange—Infinity and Clean Energy Brazil, while another has amassed a cadre of deep-pocketed backers. The private equity fund Brenco, also known as the Brazil Renewable Energy Co., includes investors such as former U.S. President Bill Clinton, Vinod Khosla, who was one of the co-founders of Sun Microsystems, America Online founder Stephen Case, Hollywood producer and Democratic fundraiser Steven Bing, and former World Bank President James Wolfensohn.



Brenco plans to invest $1 billion in a 1,100-kilometer (683 miles) ethanol pipeline, which is expected to be completed by 2011 with a capacity to deliver 4 million liters (1.1 million gallons) of ethanol a year. The company is currently applying for the necessary licenses from Brazil's environmental protection agency, Ibama, and the National Petroleum Agency.



The plan is to build a pipeline from Alto Taquari in Mato Grosso state via Mato Grosso do Sul, Goias and Sao Paulo state to Brazil’s main port in Santos. The pipeline will link six terminals: in Alto Taquari in Mato Grosso state; Costa Rica in Mato Grosso do Sul state; Paranaiba in Goias state; Sao Jose do Rio Preto and Paulinia in Sao Paulo state; and

Santos port.



Brenco has been investing heavily in the past year and a half but as of this year doesn’t have any operational mills. It expects to have 10 mills working by 2015, two of which will be in Mato Grosso and will be ready to start crushing sugarcane in March 2009. Brenco has 30,000 hectares (74,132 acres) of sugarcane plantations in Mato Grosso, Mato Grosso do Sul and Goias.



Despite optimism regarding pipeline construction, Unica is convinced that not all of the proposed pipelines will be built. “There is simply not enough demand for three ethanol pipelines,” Jank says. “The external market simply isn’t developed enough—only 15 percent of our production was exported,” he adds. Jank says that Unica is working with all the players involved to agree on a single project. “This process is very complex and it takes a long time to develop these projects.”



Jank adds that the biggest concern for the industry is Petrobras control. “Petrobras has proven that it is very successful at using monopolies to its advantage,” he says. For a project to be successful, it will need participation from all sectors, he concludes.

Repsol to Sell Brazil Assets to Sinopec for $7.1B

Date: 10/01/2010 15:06

In one of the largest Chinese oil acquisitions to date, Spain's Repsol Friday announced the sale of 40% of its Brazilian assets to China Petrochemical Corp., or Sinopec Group, for $7.1 billion.The joint venture, valued at $17.8 billion overall, guarantees Repsol key funding to explore vast and coveted offshore oil fields in South America's biggest economy.

The transaction is also another sign of China's growing prominence on the international energy scene, as it expands its access and ownership of raw materials needed to back the country's economic expansion. The biggest oil takeover by a Chinese firm to date has been Sinopec Group's $7.2 billion acquisition in 2009 of Addax Petroleum Corp., based in Switzerland, only slightly more than the venture announced Friday.


The joint Brazilian operation stands as one of Latin America's largest foreign-controlled energy ventures, as it will develop some of the world's most important exploratory discoveries in recent years, Repsol said in a filing with the stock market regulator. Repsol will have controlling interest in the joint venture with a 60% share.

At the center of the deal is Repsol's holdings in the coveted subsalt area offshore Brazil, which had been anticipated to constitute a long-term cashcow for the Spanish oil giant.

The subsalt play is exceptionally expensive because the oil is found in water depths of more than 2,000 meters and several thousand meters further under the sea bed below layers of sand, rocks and salt. Repsol has said previously that bringing its Brazilian subsalt oil finds into production could cost between $10 billion and $18 billion. Friday's deal eliminates the need for an initial public offering of its Brazilian stake they company had contemplated, Repsol said.

"With this new investment, Repsol Brasil is fully capitalized to develop all of its current projects in Brazil, including world class discoveries in the Guara and Carioca pre-salt basins," Repsol said in a press release.

Analysts at Banco BPI in Portugal said the sale to Sinopec gives a "surprisingly high valuation" to Repsol's Brazilian assets, pricing them at 19% above the bank's valuation.


Friday's deal is the latest significant international energy transaction involving Chinese players. In June, the International Energy Agency said that overseas investments by China's national oil companies in 2010 look as if they will outpace by far the $18.2 billion spent in 2009, and that was before the Repsol-Sinopec announcement. From January 2009 to April 2010 alone, the three majors--China National Petroleum Corp., Sinopec and Cnooc--spent around $29 billion worldwide to acquire oil and gas assets, the IEA said.

Sinopec Group General Manager Su Shulin in August confirmed that the company, which is state-owned, was in talks with Brazil's OGX over a bid for offshore assets in Brazil.

Sinopec officials could not be reached Friday.

Brazil is a key target for Chinese investment, with resources deals worth $4.3 billion agreed so far this year compared with $362 million in 2009, according to data from Dealogic.

Brazilian state oil company Petrobras also agreed to a $10 billion loan from China Development Bank last May in exchange for crude-oil supply to Sinopec over 10 years. Petrobras also gave Sinopec rights to explore two deep-water blocks in Brazil for oil and natural gas.

Repsol and Sinopec will continue their respective expansion plans in Brazil and will participate, jointly or individually, in future bidding rounds in the area, Repsol added.

Sinopec's Brazil entry frees up Repsol to allocate more exploration resources elsewhere in the world, such as in Western Africa which the company identified as one of its expansion areas. Repsol at the end of the second quarter had a net debt of EUR5 billion.

In its strategy to diversify from an over-reliance on single geographical areas in its oil and gas production, Repsol is also trying to sell a further stake in its Argentine YPF unit to either institutional investors or in an initial public offering. But the company so far has encountered more difficulties to strike a deal as most of the Argentine assets are gas or declining oil fields. Repsol holds close to 85% in YPF and said it wants to keep a majority stake in it.

Sinopec, CNOOC in Talks to Buy Oil Field of OGX Petroleo

SHENZHEN, Aug 18, 2010 (SinoCast Daily Business Beat via COMTEX) --

China Petroleum & Chemical Corporation (Sinopec; SEHK: 0386; SHSE: 600028) and China National Offshore Oil Corp. (CNOOC) are separately in talks to buy a 20% stake in an offshore oil field owned by OGX Petroleo & Gas Participacoes SA.



Chinese oil producers and mining companies are not unfamiliar with OGX Petroleo & Gas Participacoes SA. On February 26, Chinese steelmaker Wuhan Iron and Steel (Group) Corporation (WISCO) purchased 21.52% of MMX for USD 400 million, which is one of the subsidiaries under OGX Petroleo & Gas Participacoes SA.



The deal comes after Sinopec and CNOOC came up with a plan to buy a stake held by Marathon Oil Co. in an Angolan oil block after agreeing a price of around USD1.8 billion.



Marathon has chosen Sinopec and CNOOC's joint offer over separate bids from ONGC Videsh Ltd., the overseas investment

arm of India's state-run explorer Oil & Natural Gas Corp., and Brazil's Petroleo Brasileiro, known as Petrobras.

Industries Qatar Unit Signs Iron Ore Deal With Brazil’s Samarco

Aug. 15 (Bloomberg) -- Industries Qatar, the Gulf emirate’s state-controlled petrochemical and steel maker, said one of its units signed a contract with Samarco Mineracao SA for iron ore pellets.


Qatar Steel’s contract with Samarco Mineracao, a Brazilian iron-ore pellet producer controlled by Vale SA and BHP Billiton Ltd., is for six years, Industries Qatar said in a statement to the Qatari bourse today.

Marine-highway developments provide boost for Aker Philadelphia Shipyard

Aker Philadelphia Shipyard has gotten an indirect boost with the selection by the U.S. Department of Transportation of a coastal freight service that wants Aker to build five container ships to be part of a marine-highway system.

The selection of American Feeder Lines Holdings L.P. of New York and its partners, the South Carolina State Ports Authority and the Port of Galveston, Texas, does not directly help Aker solve its current crisis - no new ship orders or financing - and stay in business.

The South Philadelphia shipyard is completing three product tankers, which have buyers, with the last to be delivered in May. Aker recently began layoffs among its workforce of more than 1,000.

American Feeder has signed a "letter of intent" with Aker to build five container vessels. But first, the New York firm needs to raise $750 million in debt and equity financing from hedge and investment firms to start the ship construction, likely in 2012.

Eight marine-highway initiatives, endorsed Aug. 11 from among 35 applicants by the U.S. Maritime Administration, are eligible to compete for an initial $7 million grant and future aid aimed at getting cargo off congested roads and rails and onto waterways on the East, West, and Gulf Coasts, the Great Lakes, and some inland waterways.

"We have the moral support right now," said Tobias Koenig, chief executive and cofounder of American Feeder Lines. "For getting investors, this has put us in a better position because the DOT now says, 'We want this done.' "

American Feeder wants to operate a "short sea" container service between ports from Maine to Texas, based on a business model used in Europe, Asia, and South America.


Cargoes are expected to increase in 2014, when the Panama Canal is expanded and mega-ships from Asia arrive directly at the East and Gulf Coasts. Ships on the marine highway would operate as a "hub and spoke" network, similar to that of the airline industry. International containers would arrive at "hub" ports and transfer cargo to smaller ships, which would take it to "spoke" ports.

"We're working hard to find a way to get going before the end of this year," Koenig said. "Once we're there, we are happy to put orders in to Aker."

Aker senior vice president Scott Clapham said, "We are encouraged that the DOT is supporting this important effort, and hopefully it will create future work. We think this demonstrates the long-term need for the shipyard."

In addition to the eight projects selected, six others were identified to apply for federal funds after "further development of concepts."



Those include a "New Jersey Marine Highway Initiative" sponsored by the state Department of Transportation and backed by the South Jersey Port Corp. to develop maritime-freight services in five locations: Upper New York Bay; Newark Bay; Raritan and Linden; Camden, Gloucester and Paulsboro; and Salem.

Módulos para P-58 e P-62

A Petrobras recebeu propostas de 15 empresas na concorrência para a contratação de 12 módulos para as plataformas P-58 e P-62. Os envelopes técnico e comercial deverão ser abertos nos próximos 45 dias.





A concorrência foi dividida em três pacotes (II, III e IV). O pacote IV, com três módulos de compressão de gás, compressão de gás booster e armazenamento químico recebeu o maior número de propostas. Dez empresas estão na disputa: Engevix, MacLaren/ICEC, Iesa, Carioca/Dyna-Mac (Cingapura), Techint, EBE, Tomé/União, GDK, Alusa/VME Process (Indonésia) e Imetame.





O pacote II foi o segundo mais disputado, com nove propostas: Iesa, UTC, Techint, Tomé/União, GDK, Usiminas, Galvão/Mendes Junior, SOG/Toyo (Japão) e Imetame. O pacote inclui módulos de desidratação de gás, remoção de CO2, injeção de água e remoção de sulfato.





O pacote III, que inclui três módulos de processamento de óleo, teve propostas da Engevix, Niplan, UTC, Galvão/Mendes Junior, SOG/Toyo e Alusa/VME Process.





Declinaram da concorrência as empresas Queiroz Galvão, OAS, Keppel Fels Brasil, Andrade Gutierrez, GE, Jurong do Brasil, Promon Engenharia, Exterran e Construtora Norberto Odebretch.

 Petrobras and Vale Report Offshore Gas Find to ANP

Perobras and mining giant Vale notified the country's National Petroleum Agency, or ANP, that a well in the Espirito Santos Basin tested positive for natural gas.


The find was listed on the oil regulator's Web site early Thursday. The discovery was made at the 1BRSA826AESS well at the offshore ES-M- 468 Block in the Espirito Santos Basin. Petrobras is operator of the block with a 75% stake, while Vale holds the remaining 25%.

Vale, the world's largest producer and exporter of iron ore and blast-furnace pellets, has ramped up its efforts in oil and natural gas exploration as it seeks to reduce energy costs at its mining and logistics operations. Vale is Brazil's largest consumer of natural gas.


Last year, Vale and Petrobras signed farm-in agreements that gave Vale a stake in several exploration blocks operated by Petrobras. Vale now holds stakes in about 26 exploration blocks, with 22 of those blocks operated by the federal oil company.


The filling was part of a routine process that the ANP requires of oil companies operating in Brazil. Oil companies must inform the ANP of indications of oil, gas or hydrocarbons in any exploratory well within 48 hours. The disclosures are routine, and do not indicate commercial viability.



The well was drilled by the GSF Celtic Sea rig in 1,470 meters of water, targeting a total depth of 6,525 meters, ANP drilling data showed.

Brazil's OGX Set To Begin Oil Production In 2011

RIO DE JANEIRO - OGX Petroleo e Gas Participacoes SA (OGXP3.BR, OGXPY), the petroleum company owned by Brazilian billionaire Eike Batista, will start producing crude oil in mid-2011 at a rate of about 20,000 barrels per day, Batista said Thursday.

Projected output will grow to 730,000 barrels a day in 2015 and subsequently to 1.4 million, Batista told reporters at an event in Itaguai in Rio de Janeiro state.

OGX holds oil prospects in Brazil's Campos, Santos and Maranhao basins.

Various large international oil groups including Chinese companies have approached OGX about the possibility of setting up partnerships for oil drilling, Batista said.

"The Chinese are interested in investing in the offshore subsalt oil area in Brazil," Batista said. "They've already taken a look at it."

Brazil's OGX: Submits Winning Bids For 5 Oil & Gas Blocks In Colombia

Brazil's OGX Petroleo e Gas Participacoes SA (OGXP3.BR) said Wednesday it has submitted winning bids for five oil and gas exploration blocks in Colombia.

The formal awarding of the concessions by Colombia's National Agency of Hydrocarbons is expected to occur in the coming days, the company said in a press release.

Through its subsidiary OGX Petroleo e Gas Ltda, it won five blocks covering a combined 12,580.7 square kilometers in three onshore basins, comprising blocks CR-2, CR-3 and CR-4 in Cesar-Rancheria, block VIM-5 in the Lower Magdalena Valley and block VMM-26 in the Middle Magdalena Valley, it said.

OGX said it has committed to a total investment of approximately US$125 million over the first three years for the initial exploratory period, which includes the acquisition of seismic data and the drilling of wells.

The company's portfolio has increased to 34 exploratory blocks, of which 12 are onshore and 22 offshore, totaling

Petrobras creates the South Exploration and Production Operations Unit

Petrobras' Executive Board approved the proposal for creation of the South Exploration and Production Operations Unit (UO-SUL), headquartered in Itajaí, state of Santa Catarina. The UO-SUL was created on account of the increased volume of activities at the Santos Basin Exploration and Production Operations Unit (UO-BS), aiming to improve the distribution of responsibility for the management of exploration and production operations for the Santos Basin, which ranges from Cabo Frio (state of Rio de Janeiro) to Florianópolis (state of Santa Catarina).


The UO-SUL will be in command of the production of the Tiro and Sídon areas, which are still in the extended well test phase and are currently producing about 17,000 barrels per day of light oil, and of the development of production at the Cavalo Marinho, Caravela, Estrela do Mar, and Tubarão offshore fields.


Onshore, in the Paraná Basin, the UO-SUL will be responsible for developing production at the Barra Bonita field. A definitive production system for Tiro and Sídon, capable of producing 80,000 barrels per day, is currently in the final contracting phase and is slated to go on stream in 2012.


Exploratory activities, including blocks located in the Pelotas Basin, where results are expected to allow for production continuity and growth in the area, are also being developed under the UO-SUL operations scope.


The creation of the UO-SUL will also afford the UO-BS greater guidance for projects and for production at the Santos Basin's Uruguá-Tambaú, Mexilhão, Merluza and Centro (pre-salt) poles, operations for which will continue being coordinated from Santos, São Paulo.

Brazil's OGX Set To Begin Oil Production In 2011

RIO DE JANEIRO -(Dow Jones)- OGX Petroleo e Gas Participacoes SA (OGXP3.BR, OGXPY), the petroleum company owned by Brazilian billionaire Eike Batista, will start producing crude oil in mid-2011 at a rate of about 20,000 barrels per day, Batista said Thursday.

Projected output will grow to 730,000 barrels a day in 2015 and subsequently to 1.4 million, Batista told reporters at an event in Itaguai in Rio de Janeiro state.

OGX holds oil prospects in Brazil's Campos, Santos and Maranhao basins.

Various large international oil groups including Chinese companies have approached OGX about the possibility of setting up partnerships for oil drilling, Batista said.

"The Chinese are interested in investing in the offshore subsalt oil area in Brazil," Batista said. "They've already taken a look at it."

Total Acquires Interest in Santos Basin

06/30/2010 15:33


Total announces the acquisition of a 20% interest from Shell in the BM-S-54 license in the Santos Basin. Shell holds the remaining 80% and keeps the operatorship. This acquisition is subject to approval from the Brazilian authorities.



The offshore block, located about 200 kilometers south of Rio de Janeiro, covers an area of 700 square kilometers in water depth of approximately 2,000 meters.



This acquisition is part of Total's strategy to increase its presence in exploration and production activities in Brazil. "This stake in a block close to the very prolific block BM-S-11, where the Tupi, Iara and Iracema oil fields were discovered, will enable Total to participate in the promising exploration of the pre-salt area of the Santos Basin," stated Marc Blaizot, Senior vice President, Geosciences at Total Exploration & Production.



Exploration drilling is planned for later this year, subject to approval by the National Agency of Petroleum (ANP) and The Brazilian Institute of Environment and Renewable Natural Resources (IBAMA).

Petrobras' oil and gas production in Brazil and abroad up 2.1%

Source: Petrobras Agency

Date: 06/28/2010 09:18


Petrobras’ average oil and natural gas production in Brazil and abroad topped-out at 2,599,131 barrels of oil equivalent per day (boed) in May. This was 2.1% more than a year ago (2,546,553 boed), and at the same level as the total volume lifted last April (2,598,463 boed).


Only taking the fields in Brazil into account, the average oil and gas production was 2,351,993 boed. This is an increase of 1.8% over the same month in 2009, and remains stable compared to the volume produced in April this year (2,356,843 boed).


The exclusive oil production in domestic fields was 2,020,152 barrels per day, an increase of 1.5% over a year earlier, when 1,989,322 were produced, and 0.6% less than the previous month's mark (2,032,620 barrels/day), reflecting stability in production levels.


The volume of oil and natural gas coming from fields where Petrobras has operations abroad rose to 247,138 boed in May, 4.5% more than a year ago. Production going on stream at new wells in the Akpo and Agbami fields, both in Nigeria, contributed to this result. Compared to April 2010, the volume was 2.3% higher due to higher demand for Bolivian gas and to improved operating efficiency at the Agbami field.


Natural gas production in the domestic fields topped-out at 52.759 million cubic meters per day in May, practically the same as a month and a year earlier. Natural gas production abroad was 16.214 million cubic meters, 4.8% less than in May 2009 and 5.8% more than last April. The greater demand for Bolivian gas contributed to this positive result.


The schedule shows the production per Brazilian state and per region abroad in May 2010.

Transpetro launches ship built in Rio

Source: Petrobras Agency

Date: 06/24/2010 17:00



Transpetro launched into the sea today (24) in Mauá Shipyard, the first ship built in Rio for the Program for Modernization and Expansion of the Fleet (Promef). The launch was attended by the Minister for Ports, Pedro Brito, the President in exercise of Petrobras, Maria das Graças Foster, and the president of Transpetro, Sergio Machado. The event marked the reunion of the state, birthplace of the shipbuilding industry in the country, with one of his economic vocations.


The ship was named Celso Furtado, in honor of the economist who participated in the creation of the Superintendency of Northeast Development (Sudene) and laid the foundations of the current cycle of economic growth. It is a vessel for transportation of light petroleum derivatives with a capacity of 48,300 deadweight tons and 183 feet long. Besides the launch of baptism and Celso Furtado, was also carried out the keel was laid in the second of four vessels ordered products in the shipyard Maua Promef, symbolizing the start of the new vessel.


The schedule for release of ships planned for this year began on May 7 last day in the Atlântico Sul Shipyard (PE), with Suezmax João Candido. The State of Rio, the largest and most traditional marine industry of the country, already has 16 ships ordered by Promef, with $ 2.2 billion in investments. The program will create at least 50.000 jobs in the state, being 10.000 directs and 40.000 indirects.


The Maua Shipyard, which will build four ships products Promef is located in Ponta D'Areia, Niterói, a region where the Brazilian shipbuilding industry was born in the nineteenth century by the hands of the Baron of Mauá. "This release has a great historical significance, since it was right there at Ponta D'Areia where the Brazilian tradition of building ships began. We are returning to this tradition, ", said the president of Transpetro, Sérgio Machado.


The ship Celso Furtado is the first commissioned by Rio at a yard Petrobras to be launched, 13 years after the last delivery. The latter had been Livramento, completed in 1997 by Eisa Shipyard. The ship had taken 10 years to complete, in the midst of a serious crisis in the industry. The Brazilian shipbuilding industry, which had been the second largest manufacturer worldwide in the 1970s, virtually disappeared from the radars of the 1980s.


With the commissioning of 49 vessels of Promef, one of the main projects of the PAC (Growth Acceleration Program), the yards have been modernized and emergence of new production units, such as Atlântico Sul Shipyard in Pernambuco.


Today, five years after the release of Promef, Brazil already has the fourth largest worldwide portfolio of orders for tankers. Across the country, the construction of 49 new ships Transpetro will generate about 200.000 jobs, both direct and indirect. Of the projected total, 46 vessels have already been auctioned, with 38 contractors. The final three ships of the program are in the final stage of bidding.


According to data from the National Union of Construction Industry and Shipbuilding and Repair Offshore (Sinaval), Rio de Janeiro concentrates more than 50% of the total productive capacity of the country, with ability to process 288,000 tons of steel per year.


Over 40% of direct jobs generated in the sector are in the state, which now has almost 25,000 employees. Before the creation of Promef, the Brazilian shipbuilding industry employed about 2000 workers around the country Today, that number now exceeds 46 000.


PROSPECTS FOR FUTURE DEMAND


Exploitation (studies and drilling for the discovery of reservoirs) and entry into production of the pre-salt fields opens important perspectives of orders for the Brazilian naval industry. Under the new Petrobras Business Plan (2010-2014), production of oil and gas nearly double, jumping from 2.7 million barrels oil equivalent per day in 2010 to 5.3 million barrels per day 2020 and greatly increasing the demand for shipping.


The pre-salt wells are located in deeper layers of the subsoil (six thousand meters deep), most are at least 250 km away from the coast. With this, the transportation of oil or gas produced and the supply of production platforms require innovative solutions for logistics.


Demands for the shipyards is still being quantified by Petrobras and Transpetro. Beforehand, it is known that the need for ships, platforms and production support boats will increase significantly over the first two phases of Promef, designed before the pre-salt discoveries.

New Petrobras business plan expects to invest US$ 224 billion

Date: 06/21/2010 15:12


With investments totaling US$ 224 billion, Petrobras announces to market your Business Plan 2010-2014. Value that represents an average investment of $ 44.8 billion per year and an increase of 20% over the previous plan.

The Business Plan 2010-2014 foresees investments of 95% (US$ 212.3 billion) invested in Brazil and 5% (US$ 11.7 billion) abroad, placing significant investment with the market provider, with a rate totaling 67% local content, which means an annual level of recruitment in the country about US$ 28.4 billion.

In the area of technology, the business plan was based on three key challenges: (1) Expanding the Boundaries of new frontiers, the maximization of oil recovery, logistics solutions from pre-salt oil and gas, optimization of operational reliability and flexibility of refining capacity. (2) Value addition and product diversification, with innovation in fuels and lubricants, petrochemicals, gásquímica, biofuels and renewables. (3) and sustainability through the management of waters and tributaries of CO2 management and energy efficiency.

In the area of Engineering, the challenges will be overcome by reducing the complexity of designs and use of standardized solutions, and use of metrics in international projects to ensure our industrial competitiveness.

The segment of Exploration and Production (E&P) will receive investments of US$ 118.8 billion, an increase of 14% over the 2009-2013 PN. The funds will be used to ensure the discovery and appropriation of reserves to maximize the recovery of oil and gas concessions in production, and develop the production of pre-salt Santos Basin and intensify efforts in other areas of exploratory pre-salt and new frontiers in Brazil and abroad.

Besides the investments in infrastructure of US$ 12.3 billion needed for production growth, the company also is preparing to access the critical resources needed to implement this Plan. In this context, the company expects to have a greater availability of drilling rigs for deepwater in the international market, totaling 26 rigs by 2014 and 53 by 2020 and 504 support vessels by 2020 (254 in 2009).

The segment of Refining, Marketing and Transportation has planned investments of US$ 73.6 billion. The strategy to expand refining capacity was maintained, seeking a balance with the growth of oil production of Petrobras, adjusting the refining capacity to meet the quality levels of products required by the market.

Plan are provided in addition to the expansion of existing units, the entry into operation the Abreu e Lima Refinery in 2013, refineries Premium I, in 2014 and the first phase of the Petrochemical Complex of Rio de Janeiro - COMPERJ in 2013. With these investments, the total processed in Brazil in 2014 will be 2.3 million bpd.

Have investments in petrochemicals total US$ 5.1 billion, focusing on expanding the production of petrochemicals and polymers preferably through equity investments, mainly in Brazil, in an integrated manner with other segments of the Company.

The Distribution business will receive investments of US$ 2.5 billion, leaderships in order to guarantee national distribution, with a target of 40% stake in the domestic market in 2014, and performance in the distribution of oil products abroad.

After a phase of investment in infrastructure to transport natural gas for transport of produce and reach the consumer market, the segment Gas and Energy will receive $ 17.8 billion. These investments will be directed to consolidate the leadership of Petrobras in the Brazilian market for natural gas, rather than thermoelectric thermoelectric.

In addition, investment will be made for the chemical processing of natural gas, increasing the flexibility of the chain of Natural Gas and Electric Power Generation, and is planned (ammonia and urea) in synergy with other assets of Petrobras.

International - Although the most guidance on investments in the domestic market in the international arena will invest US$ 11.5 billion, with a focus on the development of exploration and production in the Gulf of Mexico (Cascade, Chinook, Saint Malo and Tiber), West Coast Africa (Nigeria) and Peru.

The segment of biofuels receive US$3.5 billion, operating in production, logistics and marketing of biofuels and participating in the value chain in Brazil and abroad, working in an integrated manner. The strategy in this segment of ethanol was redirected to the acquisition of shares in order to become a major player in the market, ensuring the field of technology for sustainable production of biofuels.

HSE, IT and R & D - The Company has earmarked investments to overcome technological challenges, operational safety and human resources. In the area of Safety and Environment (HSE) will invest US$ 3.3 billion, US$2.9 billion in the area of Information Technology and Telecommunications (ICT) and US$ 5.2 billion in research and development (R&D) with a total investment of US$11.4 billion.

The Challenge of Human Resources will ensure excellence in people management and talent identification, ensuring adequate training and education, with strengthening of culture and identity of the Company. The Business Plan 2010-2014 requires the acquisition and management of critical resources for their implementation. Skilled labor, supply chain and strengthened capacity of finance will be needed to achieve the large number of projects. The company is working to overcome these challenges.

The social and environmental responsibility is a cornerstone of corporate strategy of Petrobras, along with profitability and growth, and guiding the relationship with its stakeholders. The company operates based on the Global Compact's ten principles of the United Nations (UN), which is a signatory since 2003.

Our goal at HSE is to meet the significant growth and diversification of the company business in the coming years by continually improving the safety conditions of our operations, minimizing the impacts of operational activities and products on the environment and reduce resource consumption natural and pollutant effects.






Version to print

Sugar and Ethanol industry in Brazil witnesses large acquisitions and investments with forecasts for exceptional growth

With the planned acquisition of the Mandu Mill in Sao Paolo state, Acucar Guarani SA will be Brazil’s third biggest sugar and ethanol group. The group’s CEO announced the plans today marking the continued acquisition of smaller companies by bigger ones, currently widespread in the Brazilian ethanol industry. According to industry analysts, almost half of the 400 mills in the country are ready for acquisition.



The company’s CEO further said that it was prospecting for other opportunities that may come up and the company would most likely take part stating that it was ready for any future acquisitions. Guarani, a French owned company controlled by Tereos Sugar group, is the country’s fourth largest sugar producer and the sixth biggest ethanol producer. According to the announcement, the acquisition investment for Mandu mill will cost it $188 million and would increase its processing capacity to about 20.6 million tonnes of cane per annum.



In the investment plan, Guarani will assume Mandu’s estimated $139 million debt and it comes one month after state owned giant oil company, Petrobas, purchased a 45.7% stake in Guarani for an estimated $872 million in a bid to expand its biofuels division. Petrobas is currently in a quest to become a global leader in the biofuels industry and is targeting a projected 3.9 billion litres by the year 2013 but with its relatively limited experience in the cane, sugar and ethanol industries, Petrobas has instead preferred buying minority stakes in other companies to meet its expected target.



The Mandu mill to be acquired by Guarani has a crashing capacity of 3.5 million tones of cane per annum and is expected to be increased with little investment to 4 million tonnes. The Mandu production output has tended to split between the two industries with 60% for ethanol and 40% for sugar. Guarani expects that Mandu’s sugar production this year will reach 200,000 tonnes with an ethanol output of 175 million litres, and about 12 MW of electricity will be generated from the burning of cane bagasse.



Guarani’s annual ethanol production stood at 490 million litres of ethanol per year before this acquisition of Mandu. Guarani group has five mills located in the North and Northeast of Sao Paolo state, one of the biggest states in the country in sugar production with about 60% of Brazil’s cane output. Subsequently, Brazil has emerged as the world’s largest exporter of ethanol from sugar cane farming, prevalent in the country.



June 3, 2010.

FPSO lease for Tupi Nordeste Field

Source: Petrobras Agency

Date: 06/02/2010 14:02



Petrobras announces that, as operator of the consortium responsible for the development of block BM-S-11, has signed a Letter Of Intent (LOI) with SBM Offshore N.V. (SBM) and Queiroz Galvão Óleo e Gás S.A. (QGOG), for the construction of a FPSO that will operate the second pilot project in Tupi, in the pre-salt region of the Santos Basin.


The FPSO will be installed in Tupi Nordeste area, located at nearly 265 kilometers offshore in 2,130 meters of water and 18 kilometers from the original Tupi discovery. The FPSO will have production capacity of 120,000 bpd of light crude oil and up to 5,000,000 m3/d of natural gas, and will be operated by the companies responsible for its construction and chartered by the consortium for a 20-year period.


Block BM-S-11 is operated by Petrobras (65%), in partnership with BG E&P do Brasil Ltda. (25%), and Petrogal Brasil/Galp Energia (10%). The project schedule foresees delivery of the FPSO in 34 months from LOI execution date. The contracts will be signed in the next couple of days.

Platform kicks-off production in the Cachalote field

Source: Petrobras Agency 

Date: 06/01/2010 17:00

Petrobras kicked-off production at the FPSO Capixaba, in the Cachalote field, Saturday (29/05). The FPSO (Floating Production, Storage, and Offloading unit) is also connected to the Baleia Franca field, both located in the "Parque das Baleias" region, off the southern coast of Espírito Santo, in the Campos Basin.

The FPSO Capixaba is chartered to Petrobras by SBM, and previously operated in the Golfinho Field. To seize the opportunity to anticipate production at the Cachalote and Baleia Franca fields, the platform's process plant was adapted, making it feasible to install the rig in the Parque das Baleias.

The first well to produce is the 7-CHT-5HA-ESS, with an initial flow rate estimated at 22,000 barrels per day. By the end of the year, the platform is expected to be interconnected to a total of nine wells in the Cachalote and Baleia Franca fields. There will be three production and two injection wells in Cachalote, and three production wells - two of which in the pre-salt layer - and one injection well in Baleia Franca. Production is scheduled to peak in December 2010, at an expected volume of 100,000 barrels of oil per day.

FPSO Capixaba

Oil processing capacity: 100,000 barrels of oil per day
Gas production capacity: 3.2 million cubic meters per day
Water depth: 1,480 meters
Length: 345 meters
Height: 127 meters
Lodging: 96 workers
Storage capacity: 1,600,000 barrel

Subsea 7 Secures Major Petrobras Contract Offshore Brazil

Source: Subsea 7 Inc.
Date: 05/26/2010 16:44


Subsea 7, through its i-Tech division, announced the largest single contract award to i-Tech since the formation of the division in January 2006. The award from Petroléo Brasileiro S/A (Petrobras) is for the provision of ROV and intervention tooling services onboard a minimum of 20 and a maximum of 30 offshore drilling units. The contract value is estimated at a minimum of US $250M with the potential for up to US $405M, dependent upon the number of units awarded and the number of personnel deployed.





i-Tech will provide a newly designed ROV based on its successful Centurion QX work-class ROV. The ROV systems will be mobilized in Brazil onboard rigs currently on hire to Petrobras and onboard a number of new build rigs. Engineering and installation support teams will be based in Brazil, UK and Asia-Pac. The contract duration for each ROV ranges from a minimum of five, to a maximum ten years, with the option to extend the contract for each ROV at the end of the initial term.





i-Tech's Managing Director, Bruce Masson, commented, "We are delighted to be awarded this major contract from Petrobras, one of the largest single contracts ever awarded globally for the provision of ROV services onboard drilling units. This award further strengthens our working relationship with Petrobras and further consolidates our position as the leading ROV contractor, offshore Brazil. The contract will allow i-Tech to plan for the long term with respect to our Brazilian business, enabling us to implement new and improved methods of working which will deliver value to both Petrobras and ourselves."

Petrobras Hits Oil Pay in Caratinga

Source: Petrobras
Date: 05/26/2010 16:45
Petrobras announced the discovery of two new light oil accumulations (29o API) in reservoirs in the Campos Basin's post- and pre-salt areas, by means of the drilling of well 6-CRT-43-RJS, known as Carimbé. The well is located in the Caratinga field area, about 106 km off the coast of Rio de Janeiro, at a water depth of 1,027 m.
The accumulation discovered in Albian age carbonatic reservoirs (post-salt) is nestled at a depth of 3,950 meters. Preliminary estimates indicate recoverable volumes of about 105 million barrels of oil equivalent.
The other accumulation confirmed by the well, found in Aptian age carbonate reservoirs (pre-salt) and at a depth of 4,275 m, appears to be an extension of the accumulation discovered previously by well-BR-63A 6-RJS in Barracuda Field area. This last accumulation was announced by the Company in February 25, 2010 and preliminary data indicate recoverable volumes of about 40 million barrels of oil equivalent. If the extension assumption is confirmed, preliminary data indicates a total estimated recoverable volume of 360 million barrels of oil equivalent to these accumulations.
Tests to assess the productivity of these reservoirs are foreseen to be carried out. It is also being analyzed the possibility of interconnecting this well to the P-48 platform, currently in operation in the Caratinga Field, taking advantage of the production and offloading infrastructure installed in the area.


These accumulations will be the object of an Evaluation Plan, to be submitted to the National Petroleum Agency (ANP) soon.

Petrobras and Galp introduce biofuels partnership in Lisbon

Source: Petrobras Agency

Date: 05/20/2010 09:08

Petrobras and Galp Energia will sign a cooperation agreement for a biofuels production project in Portugal, Wednesday (05/19), in Lisbon. The companies will build a biodiesel production plant at Galp's Sines refinery, which will process the feedstock produced in Brazil. The agreement is an extension of the partnership that has already been announced for the production of palm oil in Brazil.

"The goal is to produce 260 million tons of biodiesel. The feedstock will be the palm oil produced in the state of Pará," said Petrobras Biocombustível CEO Miguel Rossetto, during a press conference held Tuesday (05/18), in Lisbon.

The CEO of Galp, Manuel Ferreira de Oliveira, who also attended the press conference, said it a "privilege" to build another partnership with Petrobras, a company with which the Portuguese outfit is already associated in exploration and production blocks in Brazil.

To Oliveira, the project will help prepare Portugal for the technological challenges involved in complying with the legislation that determines the mandatory use of biofuels. "By this, we are contributing to more sustainable mobility in environmental terms," said Manuel Ferreira de Oliveira.
In addition to the two companies' CEOs, the executive manager of Galp, Fernando Gomes; the Executive Manager of Petrobras for America, Africa and Eurasia, Fernando Cunha; and the General Director of Petrobras Portugal, Jose Fernando de Freitas, also attended the news conference.

Parity

The project will be implemented via a parity joint venture yet to be formally constituted. According to Rossetto, production is expected to start in Portugal in 2015.

Palm will be planted in degraded areas in Pará, allowing for the recovery, the protection of the soil, and for the ecological balance of these regions. "We are confident about the environmental quality of the project, as these are values that are common to the assets of Galp and Petrobras," Rossetto said.

Two big oil finds in a row for Brazil

Brazil drew oil markets' attention again on Friday when it announced its second major oil find in a week, a field that may be bigger than a 4.5-billion-barrel find announced earlier this week.
The two new finds announced by Brazil's national oil regulator, the ANP, will provide the government with the needed collateral to inject billions of dollars into the state-run oil company Petrobras in exchange for a bigger federal stake in the company.

Petrobras shares were down one per cent at 29.67 reais, despite the news, amid a broader market decline on Friday.
The rights to the federally controlled oil will help Petrobras leverage it into capital to develop Brazil's vast subsalt oil reserves and expand Latin America's mining and farm commodities-rich export profile into hydrocarbons.

Brazil's ANP energy regulator on Wednesday said the 2-ANP-1-RJS well in the Santos Basin, which was drilled by state oil company Petrobras on behalf of the agency, pierced a subsalt field that holds an estimated 4.5 billion barrels of recoverable light crude.

That discovery, known as Franco, was the largest oil find in the world since 2007, when Petrobras announced the biggest ultra-deep find in history with its five-to-eight-billion-barrel Tupi field.
The ANP said on Friday that a second well, named Libra, sunk by Petrobras in the Santos Basin may turn up even more oil than Franco.

The ANP added that the oilfield tapped by the Franco well is not linked to the three-billion to four-billion-barrel Iara field that is controlled by Brazil's state-run oil company Petrobras and its partners Portugal's Galp and Britain's BG.

Usiminas wins bid to supply 7,700 tons of steel to the Promef

Usiminas offered the best price and won the bid for the purchase of 7,700 tons of steel plates to be used to build vessels under the Transpetro Fleet Modernization and Expansion Program (Promef).

The steel will be used by the Mauá Shipyard, located in Niterói (state of Rio de Janeiro), which is building four oil derivatives ships for the program. The first of these vessels will be launched and christened during a ceremony scheduled for June. This will be the second Promef launch this year, marking the revival of Brazilian shipbuilding industry through orders placed by Transpetro.

Nine steel plants from five countries took part in the tender. With the result, Usiminas already has 40,000 tons of steel contracted to be used in the construction of Promef ships. This amount represents 32% of the plates purchased for the program to date, which adds up to 123,600 tons.

"We have always stated that our preference is to buy steel in Brazil, as long as the price is internationally competitive. The result of this tender signals the beginning of a new era in the relationship between Usiminas and Transpetro, precisely at a time in which the Brazilian naval industry is resuming its activities," said Transpetro CEO, Sergio Machado.

The construction of the 49 vessels for the Transpetro fleet will consume a total of 680,000 tons of steel. The company will continue holding international price inquiries in order to always ensure the best trade conditions for the shipyards that are participating in the Promef. Given the weight of steel in the cost of a vessel (20 to 30%), this strategy is key to boosting the competitiveness of the Brazilian shipbuilding industry.

Bourbon Strengthens Position in Brazilian Market

Source: Bourbon

Date: 05/06/2010 14:11


Bourbon Offshore Maritima has strengthened its position on the Brazilian market by signing contracts with Petrobras for 13 new vessels.

Christian Lefevre, Executive Vice-President and Chief Operating Officer of BOURBON announced, "We are delighted to have been selected by Petrobras. This is a real boost to BOURBON in its strategy of investing in innovative high-performance vessels that help clients reduce their costs, in particular through our Bourbon Liberty series. It also demonstrates that the offshore market in Brazil offers numerous development opportunities that BOURBON is well equipped to support, through its subsidiary Bourbon Offshore Maritima, by offering our full array of services and technical expertise from a local base."

With 40 Bourbon Liberty vessels currently in service, these contracts for 8 new vessels underline the success of this range of vessels whose features are ideally suited both to continental offshore and deepwater offshore.

Bourbon Offshore Maritima's fleet will thus be increased from 17 vessels (11 supply and 6 boats) to 30 vessels (19 supply and 11 crew boats) between now and the end of the year.

Petrobras hires seven new vessels within the Brazilian Shipping Companies (BSC) program

Source: Petrobras Agency

Date: 05/05/2010 10:30
Petrobras signed, Tuesday (05/04), at the Company's main office building (EDISE), in Rio de Janeiro, seven contracts for the construction of vessels for charter, for a term of 15 years, within the Brazilian Shipping Companies (BSC) Program, completing the 19 ships planned for this phase of the program.
Kingfish do Brasil Navegação Ltda. will build three vessels of 45,000 deadweight tons (DWT) for dark products (oil, fuel oil, among others), while Pancoast Navegação Ltda. will build four 30,000-DWT vessels, two for light products (naphtha, diesel, kerosene, gasoline) and two for dark products.
The BSC program is an inseparable part of a set of initiatives Petrobras has undertaken to drive naval construction in Brazil. The initiative is aimed to reduce maritime fleet dependence on the external market and generate jobs, always using international cost and quality parameters as reference.

Project to protect East Jefferson's pump stations gets Corps of Engineers order to proceed

By Bob Ross, The Times-Picayune

May 04, 2010, 3:02PM

The Corps of Engineers on Tuesday issued the order to proceed on a $174 million project to provide protection for East Jefferson's four pump stations from tropical weather.



The job goes to Odebrecht Construction Inc., of Coral Gables, Fla., which won the project after a complaint led to a second bidding process.



Originally, Kiewit Louisiana was the lowest of six bidders for the job, with a price of $195 million. One of the losing bidders, Cajun Constructors of Baton Rouge, filed an official protest with the corps U.S. Government Accountability Office. The GAO handles all federal complaints about purchases and contracts.







The Suburban Pump Station, shown here, is one of East Jefferson's four stations that would get fronting protection under a $174 million project that received an order to proceed on TuesdayAfter the project was bid again, Odebrecht was the low bidder, with a price $21 million lower than Kiewit's originally winning bid. No one came forward to protect Odebrecht's bid, which triggered the corp's order on Tuesday for Odebrecht to proceed with the work.

The pump station protection project is part of billions of dollars in projects the corps' is working hard to complete by June 1, 2011.



The project involves floodwall protection for the pump stations in the lake, in addition to a system of valves and gates to stop water from Lake Pontchartrain from getting into the canals that drain neighborhoods. This "backflow" has been named as the culprit for flooding much of East Jefferson in 2005 during Katrina.



The work will take place at the Bonnabel, Suburban, Elmwood and Duncan pump stations.

Subsea Momentum Building: Record High Marks in Sight

Brazil remains the pinnacle of current and forecast subsea activity with the prolific pre-salt play now beginning to be realized.

SUGAR LAND, Texas, May 03, 2010 (BUSINESS WIRE) -- --ExxonMobil, Chevron, and Shell have a heavy concentration of mega-projects off Nigeria throughout the decade.


--Asia Pacific -- specifically Australia -- is sending shock waves through the global petroleum equipment supply chain most notably with large demand for subsea & FLNG technologies.



Quest Offshore's quarterly survey of oil companies and subsea equipment system suppliers reveals that momentum is appearing to show through with a healthy volume of subsea system awards in Q1 2010 comprising 112 subsea trees. The upside of 2010 award activity, in line with Quest Offshore's high case forecast, shows a near-return to north of 400 subsea tree awards. Quest's mean case forecast -- undoubtedly a more achievable scenario -- reveals a promising move back to 2008/2009 award levels setting the stage for a market recovery. Quest currently projects a return to record-setting subsea award volumes toward the end of 2011 or the 1H 2012.



Brazil is the overwhelming market driver in this transition year with an estimated ~50% market share during 2010. Meaningful projects across several deepwater basins are on the horizon for project sanction and tenders over the next 18-24 months, but industry consensus expects sustained momentum materializing in 2011. With respect to the short-term forecast, Quest expects Africa award activity to increase around 50% over 2009. Asia Pacific meanwhile, continues to gain ground over the next 24 months with significant contributions from Australia.



Brazil: Continues to Carry Industry Demand



Brazil remains the pinnacle of current and forecast subsea activity with the prolific pre-salt play now beginning to be realized. Aker Solutions was recently awarded the 40 pre-salt tree contract for the Iara and Guara fields and as such carry recognition as the sole supplier of subsea trees for the prolific pre-salt at this time. As more contracts are awarded, we fully expect the other major subsea players to garner their share in this burgeoning sector.



Africa 2011-2012: Significant Activity Growth Projected with Help of New Areas



Quest expects West Africa to remain a steady base-load of the region's future demand, but much excitement has been building around other areas. Angola continues to have a meaningful backlog of mega-projects operated by experienced International Oil Companies. Total has projects in blocks 17 and 32 that will translate into high-value demand within the SURF deepwater supply chain. Total is also the first operator to utilize subsea separation off Angola; this important game changing technology will significantly impact the size, scope and complexity of the future subsea EPC contracts in the region. bp has at least two more installments of their block 31 project to execute off Angola worth hundreds of millions in subsea equipment contracts. ExxonMobil, Chevron, and Shell have a heavy concentration of mega projects off Nigeria throughout the decade.



US Gulf of Mexico: On the Verge of Re-Invention with Over US$50bn Earmarked



The US Gulf of Mexico (GoM) while expected to remain flat in 2010 compared to 2009, is poised for resurgence as IOC's start dedicating serious resources to the area which will positively impact project execution activities. ExxonMobil, Shell, bp, Chevron, and "super-independent" Anadarko among others have over 15 or more major projects in the pipeline slated for execution through the decade representing field development CAPEX in excess of US$50bn. This impending wave of significant capital-intensive projects sets a promising stage for a surge of subsea awards to 2020.



Asia Pacific: Stranded Gas Fields Welcome FLNG Technology



Asia Pacific -- specifically Australia -- is sending shock waves through the global petroleum equipment supply chain most notably with large demand for subsea & FLNG technologies. It took years of negotiations on topics ranging from environmental impact to lengthy gas sales agreements, but the mega gas fields off Australia have taken off

OTC confirms achievement, in 2011, the event in Brazil

Date: 05/03/2010 14:36


Its started on Monday (3), Houston, Texas, Offshore Technology Conference (OTC), the main international event of the offshore oil industry. For the eleventh consecutive year the Brazil pavilion organized by the Brazilian Institute of Oil, Gas and Biofuels (IBP) and the National Organization of the Petroleum Industry (Onip) attends in the OTC.

An offshoot of the project Brazilian Oil & Gas Supply, the result of agreement between Apex and Onip Brazil (Brazilian Agency for Export Promotion and Investment), the Brazil Pavilion, which in 2009 occupied 350 square meters, got bigger and changed his address. In 2010, the pavilion grew 40% (550 m²), occupying the number 1117, at the entrance of Reliant Center.


Integrate the pavilion 37 companies from various sectors of the productive chain of Brazilian oil industry, in addition to IBP, ONIP and the National Agency of Petroleum, Natural Gas and Biofuels.

"The increasing number of companies in the pavilion demonstrates the potential exporter of Brazilian suppliers and arouse interest of foreign buyer or partner for Brazil, which is today a world reference in the industry offshore oil and gas," evaluates the executive secretary of IBP, Alvaro Teixeira.


For brazilians, the big news is the confirmation of the completion of 4 to October 6, 2011, in Rio de Janeiro, the first event of the OTC brand in Brazil. Two other editions of the event, called the Offshore Technology Conference - Brazil (OTCB) and will be held every two years, is already scheduled for 2013 and 2015.


Tomorrow (4), at two o´clock (16 o´clock for GMT), the president of Petrobras, José Sergio Gabrielli and the president of Petrobras America, Orlando Azevedo, grant a news conference. The executives will talk about the pre-salt discoveries off the Brazilian coast, the Long Duration Test of Tupi Santos Basin, the start of production in Cascade and Chinook in the Gulf of Mexico and on the business of Petrobras in Brazil and abroad.

Brazil’s EBX signs partnership deal with Wisco

Sao Paulo, Brazil, 15 April – Brazilian group EBX and China's Wuhan Iron and Steel (Wisco) Friday signed a partnership agreement for the construction and operation of a steelworks in the Industrial complex of the Superport of Açu, in the north of the Brazilian state of Rio de Janeiro.

EBX will be responsible for 30 percent whilst Wisco will have the remaining 70 percent.
The steelworks will produce 5 million tons of steel products per year once it has been concluded.

The joint venture was announced in November, 2009.

The EBX group, which began by mining gold and iron in the 1980s, has focused its activity on the infrastructure and natural resources sector, and its investments are focused on companies MMX (mining), MPX (energy), , OGX (oil and gas), OSX (naval industry) and LLX (logistics), which operates in the port of Açu

Latin American Oil, Gas Fields Big Part of Repsol Strategy Through 2014

MADRID – Spanish oil giant Repsol-YPF announced on Thursday that its board of directors approved the company’s strategic plan through 2014, noting that it is based on a “larger and more solid portfolio of growth projects” that include promising oil fields in Brazil and gas deposits in Peru, Bolivia and Venezuela.


The company will earmark a sizable portion of the 28.5 billion euros ($37.75 billion) it plans to invest over the next four years for the development of those projects.


Repsol-YPF said its Horizon 2014 plan stipulates that 33 percent of its overall investment will be devoted to its Upstream (Exploration and Production) area – the company’s growth driver – and liquefied natural gas business in Brazil, Venezuela, the Gulf of Mexico, Peru and Bolivia.


“Repsol’s investment strategy for Horizon 2014 is based on a larger and more solid portfolio of growth projects in Upstream that include the development of the Guara and Piracuca oil fields in Brazil, the Kinteroni gas field in Peru, the Margarita-Huacaya gas fields in Bolivia and the Cardon IV gas field in Venezuela,” the company said in a statement.



“To these projects, other, more recent, discoveries which are undergoing production tests will be added after 2014: Panoramix, Iguazu and Abare West in Brazil, Buckskin in the Gulf of Mexico, blocks NC-200 and NC-186Y1 in Libya, Tanger-Larache in Morocco and Venus in Sierra Leone.”


During the presentation of its Horizon 2014 plan and of the company’s results in the first quarter of 2010, an press conference attended by CEO Antonio Brufau, the company announced that it expects to generate 4.5 billion euros ($5.96 billion) in after-tax earnings from the sale of assets over the next five years.

In Brazil, the company plans to invest $4-5 billion through 2014 and as much as $9 billion between 2014 and 2019 in crude production.

As previously announced in November, Repsol is looking to attract minority shareholders for its technically complex, ultra-deep sea projects in Brazil, Brufau said Thursday, adding that the company has hired several investment banks to analyze the best way to bring those partners on board.

Repsol also said it plans to invest 6.7 billion euros ($8.87 billion) in the Downstream (Marketing and Refining) area, 8.4 billion euros ($11.13 billion) in Argentine subsidiary YPF and 3.4 billion euros ($4.5 billion) in Gas Natural Fenosa, the gas group in which Repsol holds roughly a 30 percent stake.

Brufau also said the company is looking for buyers of minority stakes in YPF and could sell shares either directly to one or more large investors or through a public offering.

Repsol has based its Horizon 2014 plan on the assumption of a price-per-barrel of Brent oil – Europe’s benchmark crude – of $70 in 2010 and $90 in 2014.
Repsol-YPF posted 688 million euros ($911.2 million) in net profit in the first quarter, up 30 percent from the same period of 2009, mainly due to a recovery in crude prices (up 71.1 percent in the case of Brent) and a 10.4 percent increase in production.

ANP Approves the Transfer of 7 Blocks in the Parnaíba Basin to OGX Maranhão

OGX Petróleo e Gás Participações S.A., announced today that The Brazilian Petroleum, Natural Gas and Biofuels Agency (ANP) approved the transfer of 70% of the rights and obligations related to seven exploratory onshore blocks in the Parnaíba Basin, in the state of Maranhão, held by its subsidiary OGX Petróleo e Gás Ltda. to OGX Maranhão Petróleo e Gás Ltda., a special purpose vehicle in which the Company holds 66.7% and MPX Energia S.A. 33.3% of the capital, as disclosed in the Notice to the Market on September 24, 2009.


On September 24, 2009, OGX Ltda. acquired the participation interest in the Blocks from Petra Energia Ltda., which retains a 30% working interest in the Blocks. At that time, OGX and MPX signed a Memorandum of Understanding which formalized the intention of transferring the acquired participation to OGX Maranhão upon approval by the ANP.

This Memorandum of Understanding also formalized the intention to execute an agreement for OGX Maranhão to supply natural gas to thermoelectric plants to be developed by MPX in association with Petra, which could guarantee demand for up to the entire quantity produced in the Blocks.

OGX also announces that it has hired from Queiroz Galvão an onshore rig, QG-1, which will be responsible for drilling activities expected to begin in May. The Blocks are located in the Parnaíba Basin, considered a new exploratory frontier, and extend over an area of 21,471 km² which presents relevant potential for gas production, confirmed by a well drilled in 1987 where evidence of hydrocarbons was found.

Gas pipeline expansion in East Texas

Eagle Rock Energy Partners LP will soon begin construction on an expansion of its Extracting, Transforming, Moving and Loading (ETML) gas gathering system in East Texas.



The $US11.9 million project involves the construction of a 14.5 km, 20 inch diameter pipeline with an initial capacity of 200 MMcf/d, as well as associated treating facilities in Nacogdoches County, Texas.



Eagle Rock will also expand its existing ETML pipeline interconnects into Natural Gas Pipeline (NGPL), Texas Eastern Transmission (TETCO) and Gulf State interstate pipelines, as well as the Houston Pipeline (HPL) intrastate pipeline.



It is intended that the project will be completed and operational by the third quarter of 2010.



Meanwhile, plans are being considered for a further expansion of the pipeline network, which could result in the construction of over 80 km of 20 inch pipeline, with a total estimated cost of $US49 million.



Eagle Rock Chairman and CEO Joseph A. Mills said “Our East Texas expansion project will bring much needed infrastructure, takeaway and delivery capabilities to an area where we expect to see high levels of drilling activity as the Haynesville and Middle Bossier shale plays continue to move west into East Texas.”

Congo to construct Central Basin – Atlantic pipeline as early as 2015

The Democratic Republic of Congo intends to begin work on a proposed 1,500 km oil pipeline, which will extend from its central forests to the Atlantic coast, as early as 2015, according to the Oil Ministry.



The pipeline would carry crude oil from potential oil discoveries in Congo’s central basin, to the western port of Matadi, located on the Congo River.



Oil Ministry representative Joseph Pili Pili said the anticipated investment required for the project is $US3.5 billion. He said Congo would seek financing from oil companies, the World Bank and the African Development Bank.



Surveys carried out by Brazil’s HRT Petroleum Corporation have found three prospective sites in the region with potential oil reserves of 3 Bbbl from which oil for the pipeline project could be sourced.



Exploration in the central basin has previously been limited by its remoteness, conflict in the region and the global financial crisis.

Petrobras to Spend $75 Billion on Oil Rigs by 2020

Petrobras to Spend $75 Billion on Oil Rigs by 2020, Folha Says


April 23, 2010, 7:52 AM EDT


April 23 (Bloomberg) -- Petroleo Brasileiro SA will spend at least $75 billion to build 25 new rigs for offshore oil production and storage by 2020, Folha de S. Paulo reported, citing Chief Executive Officer Jose Sergio Gabrielli.

Almost half of the new rigs will be used to explore offshore pre-salt fields in Brazil’s Santos Basin, the newspaper said.

EBX’s companies enhance their sustainability practices

Source: OGX
Date: 04/22/2010 14:01

OGX Petróleo e Gás, the Brazilian oil and gas company responsible for the largest private sector exploratory campaign in Brazil announces to its shareholders and the market in general the establishment of EBX’s Executive Office of Sustainability and EBX’s Environmental and Social Committee.

The Executive Office of Sustainability will be responsible for developing and implementing the Sustainability Plan of the EBX Group. Paulo Monteiro, Business Development and Environmental Executive Officer of MPX Energia S.A., will assume the role of EBX’s Executive Director of Sustainability. He led the licensing process of MPX’s facilities that are currently under construction, ensuring that best practices in sustainability were followed since each project’s inception, going beyond standards observed and required internationally.

The Committee, which was created by MPX and is chaired by Paulo Monteiro, was transferred to EBX, thus increasing its scope of activities to encompass all of the EBX group of companies. The goal of the Committee is to ensure the implementation of sustainable practices throughout all companies of the EBX Group, including OGX.

The Committee is made up of a group of recognized specialists, all of them with in-depth knowledge of areas related to environmental and social issues. The Committee’s main responsibilities are to: (a) contribute to the preparation of the EBX Group sustainability plan; (b) contribute to the definition of plans and strategies for the Environmental and Social areas; (c) comment on voluntary and obligatory actions, not only those currently in progress but also for future activities; (d) contribute to the definition of performance indicators for the proposed environmental and social activities.
As Eike Batista, President of the EBX Group, has been quoted many times: “Sustainability is not a goal, but our vocation – it is in the DNA of the EBX Group”.

Aker Solutions wins large subsea contract in Brazil’s pre-salt area

Aker Solutions wins large subsea contract in Brazil’s pre-salt area

Source: Aker Solutions

Date: 04/20/2010 10:16

Aker Solutions has signed a frame agreement with Petrobras to supply 40 subsea trees for the Iara and Guará fields, located in the challenging pre-salt area of the Santos basin offshore Brazil. Contract value is approximately USD 300 million.

 

Scope of works includes engineering and manufacturing of 40 vertical subsea trees for 2 500 metres water depth, subsea control systems and 17 complete tool sets. Delivery will take place over the next four years.

 

With this latest contract for Iara and Guará, Aker Solutions will provide subsea production equipment for all the three initial field developments of the Brazilian pre-salt area. The first pre-salt subsea job was awarded in December 2008, when Aker Solutions won a contract to supply nine subsea trees for the Tupi pilot project. 

 

“Our experience developing the Tupi pilot project, the expanded manufacturing capacity at our facility in Curitiba and a consistent commercial and technical proposal were crucial to secure this contract. This evidence is aligned with our objective of being Petrobras’ preferred partner for subsea developments,” says Marcelo Taulois, president of Aker Solutions’ subsea business in Brazil.

 

Mads Andersen, executive vice president of Aker Solutions, also highlighted Aker Solutions’ market leading deepwater technology as another decisive factor in winning this contract. 

 

“In recent years, Aker Solutions has made significant investments in Brazil – both in developing suitable deepwater technologies and our manufacturing capacity. Our current dominance in the pre-salt area is also down to a highly qualified workforce which is dedicated to meeting the future demand of the Brazilian oil industry. Our company is well prepared to help Petrobras explore the pre-salt layer,” says Mads Andersen. 

 

The Guara field (BM-S-9) will receive 14 trees of this contract, and will be explored by a consortium where Petrobras has 45% participation, BG Group has 30% and Repsol YPF 25%. The Iara field (BM-S-11) which belongs to Petrobras (65%), BG Group (25%) and Petrogal (10%), will receive 26 trees.

 

The complete scope of work will be managed, engineered and executed by Aker Solutions’ manufacturing facility in Curitiba, Brazil, with support from Aberdeen, UK, for the subsea control systems. Delivery of the first subsea tree is scheduled for the end of 2011.

A Giant Leap

Brazil is ready to take a giant leap forward in petrochemicals and plastics.
LOADED WITH huge new offshore oil and gas discoveries, Brazil is ready to give a big boost to its

petrochemical and plastics industry. Supported by a stable, business-friendly government, a growing

domestic economy and strengthening ties with major countries, the industry has the opportunity to

take a giant leap forward.

“Four consecutive presidential terms of economic stability have placed Brazil on a steady growth

path. The long-term efforts to discover domestic hydrocarbon sources have finally paid off, and Brazil

now will be able to support its mature economy with abundant hydrocarbons,” says Jorge Buhler-

Vidal, director of US-based Polyolefins Consulting.

While Brazil’s economy slowed along with the rest of the world in late 2008 and will take a hit in

2009, the outlook is better than for most other countries. The International Monetary Fund (IMF)

projects that Brazil’s real GDP will fall by 1.3% in 2009, but then increase by 2.2% in 2010. That

compares with a projected 2.6% decline in the US and a 3.2% fall in the euro zone in 2009.


The Tupi offshore oil and gas discovery in November 2007 by Brazilian state-operated oil company

Petrobras was reportedly one of the largest in the preceding 20 years. The area is estimated to contain

5-8bn barrels of recoverable light oil and gas.

Petrobras aims to produce up to 1.8m bbl/day of oil from the Tupi field by 2020, bringing overall

production to 5.1m bbl/day versus 1.85m bbl/day in 2008. In the intermediate term, the company is

aiming for production of 3.6m bbl/day by 2013.

Brazil also plans to invite international energy companies to bid for concessions in its pre-salt oil

fields as early as 2010. The pre-salt oil fields, in which the Tupi discovery lies, are said to contain as

much as 80bn bbl of oil under a thick layer of salt beneath the ocean floor.

In January, Petrobras boosted its five-year investment plan to $174bn (€124bn) for 2009-2013 – up by

55% from its previous plan to invest $112bn from 2008-2012.

“The new oil and gas discoveries provide a comfortable certainty that Brazil will have access to

energy and feedstock sources under its control,” says Buhler-Vidal. “Brazil will have light oil

feedstock from Tupi to complement already available heavy oil from the Campos Basin.”

COMPERJ THE CENTERPIECE

The centerpiece of Brazil’s petrochemical ambitions is Petrobras’s planned $8.4bn Complexo

Petroquimico do Rio de Janeiro (Comperj) project.

The basic petrochemical unit, budgeted at $5.2bn, will process 150,000 bbl/day of heavy oil to

produce 1.3m tonnes/year of ethylene, 850,000 tonnes/year of propylene, as well as paraxylene (PX),

benzene and butadiene (BD), notes Buhler-Vidal. The second-generation units, budgeted at $3.2bn,

are slated to produce 800,000 tonnes/year of polyethylene (PE), 850,000 tonnes/year of polypropylene

(PP), styrene, ethylene glycol (EG), purified terephthalic acid (PTA) and polyethylene terephthalate

(PET).

While Petrobras aims to complete Comperj in 2012, there has been widespread speculation that the

project will be delayed because of difficulty in attracting partners. Most analysts peg start-up at 2013

at the earliest.

“Quattor, Braskem and Grupo Ultra, who championed the initial concept, continue to be interested,

but [so far have not] committed to Comperj’s second-generation units,” says Buhler-Vidal. “These

companies remain uninterested in investing at the refinery and basic petrochemical production level.

Petrobras continues to insist that partners must also participate in the basic products unit.”

In June, Brazilian fuel and chemical firm Grupo Ultra said it would not invest in the basic

petrochemical unit, but could be interested in second-generation units.

However, Petrobras does not rule out building the basic unit on its own. “Our large petrochemical

complex in Rio with eight planned plants is due to come on line in 2012,” said CEO Jose Sergio

Gabrielli de Azevedo at a press conference at the New York Stock Exchange (NYSE) in May.

WANTED: INTERNATIONAL PARTNER

The Comperj project could provide an opportunity for an international chemical company to gain big

exposure to Brazil’s market.

“The Comperj project is well beyond the no-return point, as many social and monetary commitments

have been made,” says Buhler-Vidal. “This appears to be a wonderful opportunity for a non-Brazilian

company to enter the Brazilian market with Petrobras’s support.”

This could include Japanese chemical companies, such as Sumitomo Chemical, Mitsubishi Chemical

or Mitsui Chemicals, as well as Middle Eastern firms such as Saudi Arabia’s SABIC or Abu Dhabi’s

International Petroleum Investment Co, said the consultant.

“It would likely be companies that would not pose complications. For example, a Venezuelan

partnership could be too politically complicated,” says Buhler-Vidal.

And while Petrobras and Chinese major Sinopec in May signed a broad memorandum of

understanding to cooperate in oil and gas exploration, refining and petrochemicals, a major

investment in Comperj from China is not likely, he notes. “You don’t really see the Chinese

companies being active sellers in Latin America,” says Buhler-Vidal. “Their big interest is to get

access to oil – not necessarily to sell polyethylene in Brazil.”

In May, local newspaper O Estado de Sao Paulo quoted Petrobras supply and refining director Paulo

Roberto Costa as saying the company was negotiating with 10 US, Asian and European companies,

and that it would also reach agreements with Brazilian firms. “We will carry on with the project,”

Costa said. “We either build a new petrochemical complex, or Brazil will be a huge importer of

resins.”

NET IMPORT POSITION

Despite a significant boost in petrochemical and plastics production over the past decade, Brazil is

still a net importer of plastics.

Brazil produced 5.14m tonnes of processed plastic products in 2008, up by 5.4% from 2007,

according to industry association Abiplast. The country exported 332,000 tonnes of processed plastic

products at a value of $1.39bn (+17.5%), while it imported 487,000 tonnes, worth $2.39bn (+30.4%).

Exports mainly went to South America’s Mercosul region (33%), while the EU accounted for 13% of

exports, according to Abiplast. Markets included Argentina (26%), the US (14%), Chile (7%), the

Netherlands (6%) and Venezuela (5%). The main exports were biaxially-oriented polypropylene

films, plastic laminates and plastic tubes.

“I don’t see Brazil becoming an export powerhouse in petrochemicals in the near future. Brazilian

companies are also investing in plants in other countries such as Venezuela and Peru,” says Buhler-

Vidal. “So they may get bigger, but not necessarily in Brazil.”

In Brazil’s domestic market, there is further potential for growth, given that plastic consumption per

capita was 26.9kg in 2007 – still below the worldwide average of around 30kg and just one-third of

the consumption in North America, Western Europe and Japan, according to a report on the trade

show Brasilplast 2009 by Swiss Business Hub Brazil in May.

The biannual Brasilplast show in Sao Paolo in May attracted 63,168 visitors and 1,302 exhibitors – a

slight increase over 2007’s figures of 62,787 visitors and 1,294 exhibitors.

“The mood was both sober and optimistic, and perhaps more intense and active than ever before,”

says Buhler-Vidal. “The general feedback was that many commercial contacts and transactions were

initiated or carried out.”


But while there is optimism about a recovery from the collapse in demand in late 2008, a sustainable

economic recovery could be slow to materialize.

“People tend to grasp at straws, taking any slightly positive news as a sign that the situation is turning

for the better,” says Buhler-Vidal. “But it is more realistic to expect that the crisis will continue

progressing and will only turn around in 2010, at best, to start a slow recovery.”

Aside from Comperj, a number of other smaller projects are moving forward. Braskem is working on

green ethylene, propylene and polymers projects, as well as polyvinyl chloride (PVC) expansions.

And PetroquimicaSuape (a venture led by Petrobras) has a new reais 4bn ($2bn) PTA and PET

complex that is scheduled to come on stream in November 2010.

Petrobras is also building the Abreau e Lima refinery (Nordeste Refinery) in Northeastern Brazil with

Venezuelan state-owned oil company PDVSA as a partner.

“The domestic increase in petrochemical capacity will continue to accompany Brazil’s industrial

growth rather than exceed it,” says Buhler-Vidal. “There will be new projects, some quite big – not

for direct exports but to support production of value-added products to be exported.”

POINT OF NO RETURN

Petrobras has made a big public commitment to the $8.4bn Comperj project, making it exceedingly

difficult to walk away now.

The company has already spent over $500m on engineering and site preparation. Plus, it has been

training the local population near Itaborai in anticipation of the Comperj project.

The prefecture of Itaborai estimates that the Comperj project, which will encompass an area of 1,033

acres (418ha), will result in the creation of 212,000 direct and indirect jobs as it spurs consumer goods

manufacturing in the region.

“This is supposed to provide many jobs, and Petrobras has already started training the local

population as electricians and welders, to participate in the construction phase. The plan is to then

absorb them into plant operations,” says Buhler-Vidal. “They are building roads and technical schools

– essentially they are creating an entire metropolitan area around this petrochemical complex.”