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.
2010-04-28
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.
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.”
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.
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.
2010-04-26
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.
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.
2010-04-24
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”.
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”.
2010-04-20
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.”
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.”
SBM Chief Sees ‘Good Chance’ Petrobras Contract Will Proceed
April 19, 2010, 10:24 AM EDT
April 19 (Bloomberg) -- SBM Offshore NV, the world’s largest producer of floating oil-production platforms, said there’s a “very good chance” an order valued at as much as $1.5 billion from Petroleo Brasileiro SA will go ahead.
On April 13, SBM received a letter of pre-commitment from the Brazilian company for an offshore production unit in the country’s pre-salt area. “We think there’s a very good chance this project will proceed,” Chief Executive Officer Tony Mace said in an interview a day later. The contract would cover a 20- year lease, valued at $1 billion to $1.5 billion, he said.
SBM, based in Schiedam, Netherlands, is expanding in Brazil as exploration gathers pace in the pre-salt region, which runs 500 miles along the coast from Espirito Santo to Santa Catarina states. In December SBM won a $1.7 billion, 18-year contract from Petroleo Brasileiro, or Petrobras, for a floating production unit. Brazil accounted for almost half of SBM’s revenue last year, according to data compiled by Bloomberg.
Petrobras plans to spend as much as $220 billion through 2014 as it taps offshore reserves, including the Tupi field, the largest oil discovery in the Americas in more than 30 years. SBM, which supplies oil producers including BP Plc and Royal Dutch Shell Plc, is investing in vessels in the expectation that clients will increase spending as crude prices rise.
Oil futures are trading above $80 a barrel in New York, a 76 percent gain from a year ago.
“There’s potentially a lot of further business to be had in Brazil, both on sale and potentially on lease business,” Mace said. “We will assess how much of our revenue and how much risk essentially of the company we will allow ourselves to place in Brazil.”
The pre-salt area has oil beneath a layer of salt resting as much as 3,000 meters (9,840 feet) beneath the ocean surface and another 3,000 to 5,000 meters below the seabed.
April 19 (Bloomberg) -- SBM Offshore NV, the world’s largest producer of floating oil-production platforms, said there’s a “very good chance” an order valued at as much as $1.5 billion from Petroleo Brasileiro SA will go ahead.
On April 13, SBM received a letter of pre-commitment from the Brazilian company for an offshore production unit in the country’s pre-salt area. “We think there’s a very good chance this project will proceed,” Chief Executive Officer Tony Mace said in an interview a day later. The contract would cover a 20- year lease, valued at $1 billion to $1.5 billion, he said.
SBM, based in Schiedam, Netherlands, is expanding in Brazil as exploration gathers pace in the pre-salt region, which runs 500 miles along the coast from Espirito Santo to Santa Catarina states. In December SBM won a $1.7 billion, 18-year contract from Petroleo Brasileiro, or Petrobras, for a floating production unit. Brazil accounted for almost half of SBM’s revenue last year, according to data compiled by Bloomberg.
Petrobras plans to spend as much as $220 billion through 2014 as it taps offshore reserves, including the Tupi field, the largest oil discovery in the Americas in more than 30 years. SBM, which supplies oil producers including BP Plc and Royal Dutch Shell Plc, is investing in vessels in the expectation that clients will increase spending as crude prices rise.
Oil futures are trading above $80 a barrel in New York, a 76 percent gain from a year ago.
“There’s potentially a lot of further business to be had in Brazil, both on sale and potentially on lease business,” Mace said. “We will assess how much of our revenue and how much risk essentially of the company we will allow ourselves to place in Brazil.”
The pre-salt area has oil beneath a layer of salt resting as much as 3,000 meters (9,840 feet) beneath the ocean surface and another 3,000 to 5,000 meters below the seabed.
2010-04-17
Cooperation Agreement with China
Fonte: Petrobras News Agenc
Petrobras announces yesterday (4/15) it signed a Strategic Cooperation Agreement with China Petrochemical Cooperation (Sinopec) and China Development Bank Corporation (CDB) aimed at assessing mutually beneficial opportunities on the areas of cooperation. The Agreement is a development of the Memorandum of Understanding (MOU) signed between Petrobras and Sinopec on May 19th, 2009.
The Agreement includes the cooperation between Petrobras and Sinopec in the following areas: Exploration & Production (E&P); Downstream; Petrochemical and fertilizers; and Services and Procurement.
In the E&P area there stands out the intention of the parties to assess future partnerships, including the possibility of selling part of Petrobras’s interest in blocks BM-PAMA-3 and BM-PAMA-8, located in the Pará-Maranhão Basin.
In Downstream and Petrochemical, the parties intent to assess opportunities for partnership in the Petrochemical Complex of Rio de Janeiro – Comperj, besides the possibility of new oil supply contracts to Sinopec.
In addition, the Agreement includes the cooperation with CDB in relation to the possibility of bilateral financing under the scope of the Cooperation Agreement, to be negotiated between the parties by Petrobras demand.
The Agreement includes the cooperation between Petrobras and Sinopec in the following areas: Exploration & Production (E&P); Downstream; Petrochemical and fertilizers; and Services and Procurement.
In the E&P area there stands out the intention of the parties to assess future partnerships, including the possibility of selling part of Petrobras’s interest in blocks BM-PAMA-3 and BM-PAMA-8, located in the Pará-Maranhão Basin.
In Downstream and Petrochemical, the parties intent to assess opportunities for partnership in the Petrochemical Complex of Rio de Janeiro – Comperj, besides the possibility of new oil supply contracts to Sinopec.
In addition, the Agreement includes the cooperation with CDB in relation to the possibility of bilateral financing under the scope of the Cooperation Agreement, to be negotiated between the parties by Petrobras demand.
Transpetro to launch first Promef vessel to sea on May 03
Date: 04/16/2010 10:12
The first vessel built under Transpetro's Fleet Modernization and Expansion Program (Promef) will set sail on May 03 from the Atlântico Sul Shipyard (EAS), in Pernambuco. The event will be attended president Luiz Inácio Lula da Silva. The Suezmax-type vessel is 274 meters long and capable of carrying a million barrels of oil.
This is the first tanker built in Brazil to be delivered to the Petrobras System in more than 13 years, a period during which the Brazilian shipbuilding industry virtually disappeared from the radar, after having been the second biggest global manufacturer in the 1970s. Based on the Promef, one of the major structuring projects of the GAP (Growth Acceleration Program), the domestic shipyards modernized their operations and new production units, such as the Atlântico Sul, appeared in the Country. Today, Brazil already has the fifth largest oil tanker order portfolio in the world.
"The first Promef vessel to set sail is a historical fact. We went through a true epic to get to it. There was much suspicion when we started the program. But this year, with the first vessels setting sail, we will see real proof of the wisdom and strength of the Promef, which is now entering a new stage, particularly since we are already working on launching its third phase," said Transpetro CEO Sergio Machado.
The Promef has already generated more than 15,000 direct jobs, a figure expected to climb to 40,000. In its first two phases, the program envisages the construction of 49 vessels in Brazil, 33 of which have already been hired. The other 16 are currently in the contracting phase. Also in this first half of the year, the second vessel of the program will also set sail, this time from the Mauá Shipyard, in Niterói (RJ).
The first vessel built under Transpetro's Fleet Modernization and Expansion Program (Promef) will set sail on May 03 from the Atlântico Sul Shipyard (EAS), in Pernambuco. The event will be attended president Luiz Inácio Lula da Silva. The Suezmax-type vessel is 274 meters long and capable of carrying a million barrels of oil.
This is the first tanker built in Brazil to be delivered to the Petrobras System in more than 13 years, a period during which the Brazilian shipbuilding industry virtually disappeared from the radar, after having been the second biggest global manufacturer in the 1970s. Based on the Promef, one of the major structuring projects of the GAP (Growth Acceleration Program), the domestic shipyards modernized their operations and new production units, such as the Atlântico Sul, appeared in the Country. Today, Brazil already has the fifth largest oil tanker order portfolio in the world.
"The first Promef vessel to set sail is a historical fact. We went through a true epic to get to it. There was much suspicion when we started the program. But this year, with the first vessels setting sail, we will see real proof of the wisdom and strength of the Promef, which is now entering a new stage, particularly since we are already working on launching its third phase," said Transpetro CEO Sergio Machado.
The Promef has already generated more than 15,000 direct jobs, a figure expected to climb to 40,000. In its first two phases, the program envisages the construction of 49 vessels in Brazil, 33 of which have already been hired. The other 16 are currently in the contracting phase. Also in this first half of the year, the second vessel of the program will also set sail, this time from the Mauá Shipyard, in Niterói (RJ).
2010-04-16
Keppel fortifies market leadership in Brazil with new shipbuilding yard
Keppel Offshore & Marine, through its wholly-owned Brazilian subsidiary, Navegantes Maritime Construction and Services, has entered into an agreement with Brazil’s TWB Group to acquire the Estaleiro TWB shipyard in Navegantes, Santa Catarina. This acquisition is subject to the fulfillment of conditions by TWB Group.
This 7.6-ha shipyard will be operated by Keppel O&M’s specialised shipbuilding arm, Keppel Singmarine. It has a 300-metre long waterfront and is equipped with a slipway, pipe and hull shops and an outfitting quay. Keppel O&M’s total investment in the yard, including further capital expenditure to upgrade and modernise the facility, will be in the region of about US$50 million.
Mr Chow Yew Yuen, President (the Americas) of Keppel O&M, said, “Our latest acquisition reinforces Keppel O&M’s Near Market, Near Customer strategy, and complements our BrasFELS yard in Angra dos Reis in offering a slew of comprehensive solutions for Brazil’s offshore oil and gas sector.
“Petrobras has announced plans to charter some 147 locally-built Offshore Support Vessels over the next five years, with at least 70% of the work on each newbuild to be carried out within the country. Through this new facility, we will bring our specialised shipbuilding expertise to the doorsteps of Brazil’s offshore field development market to help satisfy the demand for robust support vessels.”
To be named Keppel Singmarine Brasil, the new yard will focus on the construction of Offshore Support Vessels such as Anchor Handling Tug Supply vessels, Platform Supply Vessels, Oil Recovery Support Vessels and harbour tugs, among others. It will also be equipped to undertake the fabrication of offshore modules, which will be an added advantage for Keppel to support the execution of major projects at the BrasFELS yard.
The modernisation programme planned for Keppel Singmarine Brasil will include upgrading the existing slipway, as well as constructing a new slipway, a wharf, heavy lift gantry cranes and pipe and hull shops fitted with modern machinery and equipment.
Keppel’s new yard is expected to be operational by the second half of 2010. At full capacity, it is estimated to be able to complete an average of eight vessels a year.
“Keppel Singmarine Brasil is set to offer a one-stop solution for customised vessels, backed by our proven proprietary technology and engineering capabilities. I am confident that we have a compelling proposition for ship owners operating in Brazil, which will poise us to capture new opportunities and meet Brazil’s high local content requirements,” Mr Chow added.
The municipality of Navegantes, where Keppel Singmarine Brasil is based, is an hour’s flight from the city of Sao Paulo. The shipyard is located 110km north of Florianopolis, the capital city of Santa Catarina, and is 15 minutes by car to the Navegantes airport. It is also in proximity of supporting marine industries in the Navegantes and Itajai areas.
The above acquisition is not expected to have any material impact on the net tangible assets and earnings per share of Keppel Corporation Limited for the current financial year.
2010-04-15
Sinopec, Petrobras To Sign Crude Oil Supply Deal In Brazil
BEIJING (Dow Jones)--China Petrochemical Corp. will sign a package of agreements, including a crude oil purchase deal, with Petroleo Brasileiro SA (PBR) or Petrobras, during Chinese president Hu Jintao's visit to Brazil, a Sinopec Group official said Thursday.
The president of Sinopec Group, Su Shulin, is now in Brazil with several representatives from group subsidiaries, Sinopec spokesman Huang Wensheng told Dow Jones Newswires.
"The crude oil purchase deal is to be signed between Petrobras and our listed company, China Petroleum & Chemical Corp. (SNP)."
He declined to elaborate on the crude oil supply volume or details on the other agreements.
The new supply agreement will build on a previous oil pact the two companies signed last May, under which Petrobras is to supply crude oil to Sinopec for 10 years, with 150,000 barrels of crude a day for the first year and 200,000 barrels a day over the next nine years.
In the first two months of 2010, China imported an average of 186,000 barrels a day of crude oil from Brazil, according to Chinese government data.
On March 31, Brazilian Vice Minister for Energy and High Technology Andre Amado had said Petrobras was in talks with Chinese companies and hoped to finalize energy agreements in time for Hu's visit to Brazil in mid-April.
It isn't clear whether a new loan will be in place for the deal, but Petrobras officials met China Development Bank officials at the end of last month in Beijing.
State-owned CDB has been involved in several credit-energy agreements that Chinese oil companies have signed with different countries in the past year, including a $10 billion loan for Petrobras in May 2009.
Meanwhile, Sinopec and Petrobras have agreed to jointly invest in two deepwater blocks in offshore northern Brazil owned by Petrobras, an executive with the Brazilian company said.
This could possibly be included in the package, but the official, who declined to be named, couldn't confirm it.
The two blocks aren't in Brazil's promising subsalt region, where major oil deposits have been found.
The president of Sinopec Group, Su Shulin, is now in Brazil with several representatives from group subsidiaries, Sinopec spokesman Huang Wensheng told Dow Jones Newswires.
"The crude oil purchase deal is to be signed between Petrobras and our listed company, China Petroleum & Chemical Corp. (SNP)."
He declined to elaborate on the crude oil supply volume or details on the other agreements.
The new supply agreement will build on a previous oil pact the two companies signed last May, under which Petrobras is to supply crude oil to Sinopec for 10 years, with 150,000 barrels of crude a day for the first year and 200,000 barrels a day over the next nine years.
In the first two months of 2010, China imported an average of 186,000 barrels a day of crude oil from Brazil, according to Chinese government data.
On March 31, Brazilian Vice Minister for Energy and High Technology Andre Amado had said Petrobras was in talks with Chinese companies and hoped to finalize energy agreements in time for Hu's visit to Brazil in mid-April.
It isn't clear whether a new loan will be in place for the deal, but Petrobras officials met China Development Bank officials at the end of last month in Beijing.
State-owned CDB has been involved in several credit-energy agreements that Chinese oil companies have signed with different countries in the past year, including a $10 billion loan for Petrobras in May 2009.
Meanwhile, Sinopec and Petrobras have agreed to jointly invest in two deepwater blocks in offshore northern Brazil owned by Petrobras, an executive with the Brazilian company said.
This could possibly be included in the package, but the official, who declined to be named, couldn't confirm it.
The two blocks aren't in Brazil's promising subsalt region, where major oil deposits have been found.
2010-04-14
Keppel to overhaul Brazil shipyard for offshore use
Published: Apr 14, 2010
Offshore staff
SINGAPORE -- Navegantes Maritime Construction and Services, a subsidiary of Keppel Offshore & Marine, has entered into an agreement with Brazil’s TWB Group to acquire the Estaleiro TWB shipyard in Navegantes, 110 km (68.3 mi) north of Florianoplolis in Santa Catarina.
The 7.6-ha (18.8-acre) shipyard, to be named Keppel Singmarine Brasil, will include a 300-m (984-ft) long waterfront. Keppel O&M’s total investment in the facility, including an upgrade program, will be around US$50 million.
Focus of construction for the new yard will be offshore support vessels, i.e. anchorhandlers, platform supply and oil recovery support vessels. However, the yard will also be equipped to fabricate offshore modules, to support execution of major projects at the Keppel’s BrasFELS yard.
Planned modernization work will include upgrading the existing slipway, and constructing a new slipway, a wharf, heavy lift gantry cranes and pipe and hull shops fitted with modern machinery and equipment.
Keppel’s new yard is expected to be operational by the second half of this year. At full capacity, it should be able to complete an average of eight vessels per year.
Brazil: Poster Boy of Globalization Charts Own Course
In 1964, in the lead up to a coup that opened 21 years of military rule in Brazil, a popular bumper sticker in Rio de Janeiro read, “Enough of intermediaries!—[U.S. Ambassador] Lincoln Gordon for President!” In the coup’s wake, Brazil received $2 billion in aid from the United States, becoming for a time the third largest U.S.-aid recipient in the world.
Brazil’s military rulers were as tightly bound to the U.S. national security strategy as any in Latin America during the 1970s. But a reformed Brazil has shed its subservient past. Instead of becoming a victim of globalization, like many in the underdeveloped South, Brazil emerged a victor to claim a leading role in world affairs.
Just how much Brazil’s standing has changed was evinced during U.S. Secretary of State Hillary Clinton’s trip to Latin America in March. While in Brasilia, Clinton requested Brazil’s support for a new round of sanctions against Iran for its pursuit of nuclear weapons. Her plea was a perfect chance for Brazil to fall in line with the United States after President Lula da Silva’s recent overtures toward Iran, including a warm reception granted to President Mahmoud Ahmadinejad in November.
Blunt dismissal
Instead, both Lula and his top diplomat, Celso Amorim, bluntly dismissed Clinton’s petition. “We will not simply bow down to an evolving consensus if we do not agree,” observed Amorim dryly. That Clinton felt compelled to travel to Brazil to talk about a faraway issue was significant in itself, but the hosts’ curt refusal to toe the line spoke volumes more about Brazil’s newfound self-assurance.
The source of this new frame of mind is the country’s transformation from macroeconomic basket case to stable market economy during the past 16 years. Under the stewardship of two exceptionally good leaders from the center-left, Fernando Henrique Cardoso and Lula, the country deregulated and opened up its economy, privatized large chunks of a bloated public sector, and above all, cured a chronic case of high inflation.
It accomplished all this while putting in place successful social programs and preserving crucial state functions, notably in the realm of research and development. The result has been a reduction of poverty—from 48 percent of the population in 1990 to 26 percent in 2008—and rapid expansion of the middle class, always good news for democratic consolidation. According to a study by the Getulio Vargas Foundation, upward social mobility allowed 10 million Brazilians to join the middle class between 2004 and 2008.
To put it simply, the convergence of political stability, market-oriented reforms, and macroeconomic soundness allowed Brazil to unleash its natural potential just as globalization was gathering pace. Exports of an increasingly open Brazil have grown fivefold in two decades, pushing trade from 11 percent of GDP in 1990 to 18 percent in 2009.
Massive recent oil discoveries give Brazil the second largest oil reserves in South America (12.6 billion barrels). Combined with large-scale ethanol production (37 percent of the world’s total), and huge soybean exports (32 percent of the world’s total), among many other assets, Brazil has become an energy and commodity powerhouse.
Transformation
This is not the only transformation that bolsters the country’s growing economic might. Once the largest debtor in the developing world, today Brazil is much less dependent on foreign financial assistance and investment flows than a generation ago. Brazil’s foreign debt today stands at less than 14 percent of GDP, a fraction of what it was at the onset of the debt crisis of the early 1980s.
Even more remarkably, while the country continues to attract large quantities of foreign direct investment ($45 billion in 2008 alone), it has become a major investor in its own right. In 2006, Brazil became a significant net foreign investor, a feat not seen in any other Latin American country. Moreover, any account of why the country emerged virtually unscathed from the global economic crisis must take into account the conspicuous role of the state-owned Brazilian Development Bank, which today boasts a larger lending portfolio than the World Bank.
The combination of heavy presence in crucial commodity markets, more diverse commercial links, and greater financial autonomy have compounded Brazil’s sheer size to give it unprecedented diplomatic clout. This is evident first in Latin America. From the rhetorical flare-ups between Colombia and Venezuela to the 2008 diplomatic rift between Colombia and Ecuador to the conflicts between Bolivia’s President Evo Morales and his internal opponents in 2007-08, which threatened to split the Andean country apart, virtually every diplomatic crisis in South America during the past few years has featured moderating intervention by President Lula.
While Lula’s personal appeal is part of the reason, structural factors are at play, too, including the sudden proliferation of regional organizations—notably the recently launched Latin American and Caribbean Community of States—that threatens to hollow out the mandate and relevance of the Organization of American States. The new outfits, which pointedly exclude the United States and Canada, are tangible signs of Brazil’s intention to redraw the Western Hemisphere’s diplomatic architecture, suiting the leadership role that the country envisions playing in South America.
Nothing perhaps demonstrates Brazil’s new self-confidence as its relations with Iran, a trade partner to the tune of $1.3 billion a year—nearly all in Brazilian exports. Iran’s nuclear dispute with the United States and Europe offers Brazil the opportunity to assert its autonomy.
Brazil has not forgotten being at the receiving end of the U.S. hectoring during the 1970s regarding the development of its own nuclear program. For many observers outside of Brazil, giving Iran the benefit of the doubt on the nuclear issue may appear either as naïve or cynical. Yet, for many Brazilians, the stance is simply a rejection of their past subservience to the United States.
In an election year, this is useful rhetorical meat that Lula can throw to his own leftist party’s political base, often doubtful about his friendly approach to markets.
Finally, the Iranian issue is a chance to test the limits of a clever diplomatic device that has benefited Lula in the past: the dynamic whereby he, the acceptable face of the left in Latin America, plays good cop to Venezuela’s Hugo Chavez’s boisterous and deranged bad cop. Lula’s position on Iran may be irksome and even prove unsustainable, but it is not devoid of rationality. Above all, it’s a message of independence vis-à-vis the United States that Brazil can afford as never before.
A cruel and oft-repeated joke says that Brazil is the country of the future—and will always be. As Hillary Clinton found out, easygoing Brazilians are not willing to be the butt of jokes anymore. They act as though the future has finally arrived. They may well be right.
A technician of the Brazilian state oil company Petrobras works on a machine at the station of a natural gas pipeline in Itabuna, Bahia, in northeastern Brazil. (Vanderlei Almeida/AFP/Getty Images)
Brazil’s military rulers were as tightly bound to the U.S. national security strategy as any in Latin America during the 1970s. But a reformed Brazil has shed its subservient past. Instead of becoming a victim of globalization, like many in the underdeveloped South, Brazil emerged a victor to claim a leading role in world affairs.
Just how much Brazil’s standing has changed was evinced during U.S. Secretary of State Hillary Clinton’s trip to Latin America in March. While in Brasilia, Clinton requested Brazil’s support for a new round of sanctions against Iran for its pursuit of nuclear weapons. Her plea was a perfect chance for Brazil to fall in line with the United States after President Lula da Silva’s recent overtures toward Iran, including a warm reception granted to President Mahmoud Ahmadinejad in November.
Blunt dismissal
Instead, both Lula and his top diplomat, Celso Amorim, bluntly dismissed Clinton’s petition. “We will not simply bow down to an evolving consensus if we do not agree,” observed Amorim dryly. That Clinton felt compelled to travel to Brazil to talk about a faraway issue was significant in itself, but the hosts’ curt refusal to toe the line spoke volumes more about Brazil’s newfound self-assurance.
The source of this new frame of mind is the country’s transformation from macroeconomic basket case to stable market economy during the past 16 years. Under the stewardship of two exceptionally good leaders from the center-left, Fernando Henrique Cardoso and Lula, the country deregulated and opened up its economy, privatized large chunks of a bloated public sector, and above all, cured a chronic case of high inflation.
It accomplished all this while putting in place successful social programs and preserving crucial state functions, notably in the realm of research and development. The result has been a reduction of poverty—from 48 percent of the population in 1990 to 26 percent in 2008—and rapid expansion of the middle class, always good news for democratic consolidation. According to a study by the Getulio Vargas Foundation, upward social mobility allowed 10 million Brazilians to join the middle class between 2004 and 2008.
To put it simply, the convergence of political stability, market-oriented reforms, and macroeconomic soundness allowed Brazil to unleash its natural potential just as globalization was gathering pace. Exports of an increasingly open Brazil have grown fivefold in two decades, pushing trade from 11 percent of GDP in 1990 to 18 percent in 2009.
Massive recent oil discoveries give Brazil the second largest oil reserves in South America (12.6 billion barrels). Combined with large-scale ethanol production (37 percent of the world’s total), and huge soybean exports (32 percent of the world’s total), among many other assets, Brazil has become an energy and commodity powerhouse.
Transformation
This is not the only transformation that bolsters the country’s growing economic might. Once the largest debtor in the developing world, today Brazil is much less dependent on foreign financial assistance and investment flows than a generation ago. Brazil’s foreign debt today stands at less than 14 percent of GDP, a fraction of what it was at the onset of the debt crisis of the early 1980s.
Even more remarkably, while the country continues to attract large quantities of foreign direct investment ($45 billion in 2008 alone), it has become a major investor in its own right. In 2006, Brazil became a significant net foreign investor, a feat not seen in any other Latin American country. Moreover, any account of why the country emerged virtually unscathed from the global economic crisis must take into account the conspicuous role of the state-owned Brazilian Development Bank, which today boasts a larger lending portfolio than the World Bank.
The combination of heavy presence in crucial commodity markets, more diverse commercial links, and greater financial autonomy have compounded Brazil’s sheer size to give it unprecedented diplomatic clout. This is evident first in Latin America. From the rhetorical flare-ups between Colombia and Venezuela to the 2008 diplomatic rift between Colombia and Ecuador to the conflicts between Bolivia’s President Evo Morales and his internal opponents in 2007-08, which threatened to split the Andean country apart, virtually every diplomatic crisis in South America during the past few years has featured moderating intervention by President Lula.
While Lula’s personal appeal is part of the reason, structural factors are at play, too, including the sudden proliferation of regional organizations—notably the recently launched Latin American and Caribbean Community of States—that threatens to hollow out the mandate and relevance of the Organization of American States. The new outfits, which pointedly exclude the United States and Canada, are tangible signs of Brazil’s intention to redraw the Western Hemisphere’s diplomatic architecture, suiting the leadership role that the country envisions playing in South America.
Nothing perhaps demonstrates Brazil’s new self-confidence as its relations with Iran, a trade partner to the tune of $1.3 billion a year—nearly all in Brazilian exports. Iran’s nuclear dispute with the United States and Europe offers Brazil the opportunity to assert its autonomy.
Brazil has not forgotten being at the receiving end of the U.S. hectoring during the 1970s regarding the development of its own nuclear program. For many observers outside of Brazil, giving Iran the benefit of the doubt on the nuclear issue may appear either as naïve or cynical. Yet, for many Brazilians, the stance is simply a rejection of their past subservience to the United States.
In an election year, this is useful rhetorical meat that Lula can throw to his own leftist party’s political base, often doubtful about his friendly approach to markets.
Finally, the Iranian issue is a chance to test the limits of a clever diplomatic device that has benefited Lula in the past: the dynamic whereby he, the acceptable face of the left in Latin America, plays good cop to Venezuela’s Hugo Chavez’s boisterous and deranged bad cop. Lula’s position on Iran may be irksome and even prove unsustainable, but it is not devoid of rationality. Above all, it’s a message of independence vis-à-vis the United States that Brazil can afford as never before.
A cruel and oft-repeated joke says that Brazil is the country of the future—and will always be. As Hillary Clinton found out, easygoing Brazilians are not willing to be the butt of jokes anymore. They act as though the future has finally arrived. They may well be right.
Brazil’s Batista Cancels EBX Sale After OSX Plunge
April 14 (Bloomberg) -- Brazilian billionaire Eike Batista canceled his planned initial public offering of holding company EBX Group Ltd. after raising $3.9 billion less than he first sought from the sale of shipbuilding unit OSX Brasil SA.
“There is no way today we will consider an IPO of EBX,” Batista, 53, said late yesterday in an interview at the company’s headquarters in Rio de Janeiro. “The total market value of our companies now is $44 billion. Before $100 billion, $120 billion, we’re not doing an IPO of EBX.”
Batista, who said March 30 he was “ready” to take his sixth company public once equity markets improved, changed strategy after four Brazilian share sales priced below their anticipated range this year and state-controlled oil producer Petroleo Brasileiro SA said it would raise as much as $25 billion through new stock by the end of June. OSX fell 24 percent since its March 18 IPO
Chinese Demand
Batista expects Brazil’s economy to grow about 5 percent this year and Chinese demand for natural resources to increase, factors that he says will help his companies outperform the Bovespa index for a second year. His LLX Logistica SA port operator rose 570 percent in 2009 compared with an 83 percent gain in the benchmark Bovespa index. This year LLX is down 11 percent compared with a 3 percent rise in the Bovespa.
Batista’s changed strategy on EBX reflects concern over the planned Petrobras share sale that has created “a big overhang” in the market, said Duncan Littlejohn, who manages $1.6 billion in global private equity funds at Paul Capital Partners in Sao Paulo. “If you compare the numbers that will be raised in one issue, that’s close to several years of new issues,” he said.
OSX Sale
OSX raised 2.45 billion reais ($1.4 billion) through the sale of about 3.06 million shares for 800 reais each after Batista reduced the overall offering by as much as 67 percent. The company, based in Rio de Janeiro, has never reported a profit and its main assets are 3.2 million square meters of oceanfront property in Santa Catarina and guaranteed orders from OGX Petroleo & Gas Participacoes SA, Batista’s oil company.
Four Listings
In the first quarter of 2010, four companies listed shares, raising 4.7 billion reais, according to the Web site of the Brazil’s BM&FBovespa SA exchange. In the U.S., 23 American companies have completed IPOs this year, raising a total of about $4 billion, and have outperformed the Standard & Poor’s 500 Index by an average of 4 percentage points, according to data compiled by Bloomberg.
Batista’s OSX was the fourth company to sell shares below the estimated price range in Brazil this year. Port and highway operator EcoRodovias Infraestrutura & Logistica SA was the first to price within the range when it sold shares last month.
“When you’re the one who wasn’t very successful, you need to go back with a great story,” Eric Conrads, a hedge fund manager at Mexico City-based Armada Capital SA, said in a telephone interview yesterday when asked about the prospects for another Batista IPO. “I think he will go back to the market with the right timing. It’s too early though.”
All of Batista’s companies have the letter X in their names, something he expects will help him prosper.
“I used to have my gold company called TVX, an abbreviation for Treasury Valley Exploration,” he said yesterday. “It had the X as its stock symbol. It gave me always this luck.”
Visiting Executives
Batista said a group of his executives will meet April 16 with 114 representatives of 65 companies “who are eager to come to Brazil and build factories” at his port project, Porto Acu, in northern Rio de Janeiro state. Batista, who is lobbying for investment as officials from Brazil, Russia, India and China meet in Brasilia this week, said yesterday the project may attract $40 billion over 10 years.
Porto Acu is the closest point to Asia from the Americas coast of the Atlantic, according to Batista. Wuhan Iron & Steel Group, China’s third-largest steelmaker, paid $400 million in November for almost 22 percent of Batista’s MMX Mineracao e Metalicos SA iron-ore company. The companies also plan to jointly build a steel mill at the site, costing as much as $5 billion. MMX gained 1.2 percent to 4.07 reais.
“There is no way today we will consider an IPO of EBX,” Batista, 53, said late yesterday in an interview at the company’s headquarters in Rio de Janeiro. “The total market value of our companies now is $44 billion. Before $100 billion, $120 billion, we’re not doing an IPO of EBX.”
Batista, who said March 30 he was “ready” to take his sixth company public once equity markets improved, changed strategy after four Brazilian share sales priced below their anticipated range this year and state-controlled oil producer Petroleo Brasileiro SA said it would raise as much as $25 billion through new stock by the end of June. OSX fell 24 percent since its March 18 IPO
Chinese Demand
Batista expects Brazil’s economy to grow about 5 percent this year and Chinese demand for natural resources to increase, factors that he says will help his companies outperform the Bovespa index for a second year. His LLX Logistica SA port operator rose 570 percent in 2009 compared with an 83 percent gain in the benchmark Bovespa index. This year LLX is down 11 percent compared with a 3 percent rise in the Bovespa.
Batista’s changed strategy on EBX reflects concern over the planned Petrobras share sale that has created “a big overhang” in the market, said Duncan Littlejohn, who manages $1.6 billion in global private equity funds at Paul Capital Partners in Sao Paulo. “If you compare the numbers that will be raised in one issue, that’s close to several years of new issues,” he said.
OSX Sale
OSX raised 2.45 billion reais ($1.4 billion) through the sale of about 3.06 million shares for 800 reais each after Batista reduced the overall offering by as much as 67 percent. The company, based in Rio de Janeiro, has never reported a profit and its main assets are 3.2 million square meters of oceanfront property in Santa Catarina and guaranteed orders from OGX Petroleo & Gas Participacoes SA, Batista’s oil company.
Four Listings
In the first quarter of 2010, four companies listed shares, raising 4.7 billion reais, according to the Web site of the Brazil’s BM&FBovespa SA exchange. In the U.S., 23 American companies have completed IPOs this year, raising a total of about $4 billion, and have outperformed the Standard & Poor’s 500 Index by an average of 4 percentage points, according to data compiled by Bloomberg.
Batista’s OSX was the fourth company to sell shares below the estimated price range in Brazil this year. Port and highway operator EcoRodovias Infraestrutura & Logistica SA was the first to price within the range when it sold shares last month.
“When you’re the one who wasn’t very successful, you need to go back with a great story,” Eric Conrads, a hedge fund manager at Mexico City-based Armada Capital SA, said in a telephone interview yesterday when asked about the prospects for another Batista IPO. “I think he will go back to the market with the right timing. It’s too early though.”
All of Batista’s companies have the letter X in their names, something he expects will help him prosper.
“I used to have my gold company called TVX, an abbreviation for Treasury Valley Exploration,” he said yesterday. “It had the X as its stock symbol. It gave me always this luck.”
Visiting Executives
Batista said a group of his executives will meet April 16 with 114 representatives of 65 companies “who are eager to come to Brazil and build factories” at his port project, Porto Acu, in northern Rio de Janeiro state. Batista, who is lobbying for investment as officials from Brazil, Russia, India and China meet in Brasilia this week, said yesterday the project may attract $40 billion over 10 years.
Porto Acu is the closest point to Asia from the Americas coast of the Atlantic, according to Batista. Wuhan Iron & Steel Group, China’s third-largest steelmaker, paid $400 million in November for almost 22 percent of Batista’s MMX Mineracao e Metalicos SA iron-ore company. The companies also plan to jointly build a steel mill at the site, costing as much as $5 billion. MMX gained 1.2 percent to 4.07 reais.
2010-04-12
Petrobras Will Start Cachalote
Petroleo Brasileiro SA, Brazil’s state-run oil producer, will start output at the Cachalote offshore field in Brazil this quarter with a 100,000-barrel-a- day vessel upgraded by SBM Offshore NV.
SBM, the world’s largest supplier of floating oil platforms, overhauled the Capixaba production, storage and offloading ship for the project, Darko Kulas, a spokesman for Schiedam, Netherlands-based company, said in an e-mailed response to questions. The vessel is in Brazil, he said.
Petrobras, as the Rio de Janeiro-based company is known, is boosting its fleet of marine-drilling rigs as it seeks to tap Brazil’s pre-salt offshore reserves and more than double oil output to 5.7 million barrels a day by 2020. The pre-salt deposits include Tupi, the largest oil find in the America’s since Mexico’s Cantarell in 1976.
Cachalote is in the Campos Basin off Rio de Janeiro’s coast, near the Jubarte and Baleia Franca fields.
A Petrobras spokesman, who can’t be named under company policy, was unable to provide a production target for the field or a start date for production.
SBM, the world’s largest supplier of floating oil platforms, overhauled the Capixaba production, storage and offloading ship for the project, Darko Kulas, a spokesman for Schiedam, Netherlands-based company, said in an e-mailed response to questions. The vessel is in Brazil, he said.
Petrobras, as the Rio de Janeiro-based company is known, is boosting its fleet of marine-drilling rigs as it seeks to tap Brazil’s pre-salt offshore reserves and more than double oil output to 5.7 million barrels a day by 2020. The pre-salt deposits include Tupi, the largest oil find in the America’s since Mexico’s Cantarell in 1976.
Cachalote is in the Campos Basin off Rio de Janeiro’s coast, near the Jubarte and Baleia Franca fields.
A Petrobras spokesman, who can’t be named under company policy, was unable to provide a production target for the field or a start date for production.
2010-04-10
Brazil-West African Connection Sparks Subsalt Oil Search
Over the past four decades, the operations now owned by Chevron Corp. in Angola's Cabinda province have crept from just offshore to 50 miles out to sea.
But as it drills further out and deeper down, the company is looking to a model 3,000 miles across the Atlantic Ocean to the coast of South America for guidance.
Chevron is just one of several companies and African governments taking a fresh look at West African prospects as they seek to replicate the huge discoveries made in a Brazilian region with a similar geology.
At Chevron's local offices in Cabinda, John Baltz, head of production for Southern Africa, says "you see a lot of similarities" with Brazil in terms of oil reservoirs.
These reservoirs, known as subsalt, lie beneath the thick layer of salt that started to accumulate 150 million years ago, when the single southern supercontinent, the Gondwana, began to split into Africa and South America.
In the past, when oil companies were looking for similarities between oil reservoirs, they would generally move to the neighboring country -- for instance from Angola to Congo.
But unlike those above the salt layer, the geological structures below have generally remained unchanged since the Gondwana broke up. That makes it worth looking on both the western coast of Africa and the eastern side of Brazil, experts say.
Recent improvements in seismic imaging are unlocking geological secrets, says Bernie Vining, a regional director at U.K. oil and gas consultancy Gaffney, Cline & Associates Ltd.
These new techniques led to giant finds in the previously overlooked Brazil subsalt; in 2007, Brazil's Petroleo Brasileiro S.A., or Petrobras, made the Western Hemisphere's largest oil discovery in 30 years, the Tupi field, with estimated recoverable reserves of between 5 billion and 8 billion barrels of oil equivalent.
And thanks to the giant Brazilian finds, subsalt drilling, long considered expensive and difficult for most companies, is now moving center-stage. The Brazil connection is seen as an opportunity for African countries keen to increase their future oil revenue, for small companies that want to raise cash on the market and for oil majors struggling to replenish their reserves.
For example, discoveries in Northeastern Brazil have rekindled interest in the country that lies on the opposite side of the South Atlantic, Gabon -- long neglected by exploration companies. "There is a big interest in Gabon because of the interest in Brazil," said Jim Martin, a vice-president at consultancy CGGVeritas, which is advising the Gabonese government on its next licensing round, which starts in May.
As a result, Martin said, CGGVeritas has decided to use data on the Latin American country in the licensing and will emphasize the potential of subsalt blocks to possible bidders, he said.
Subsalt exploration is particularly critical for Gabon, whose mature oil basins have been declining from their 1997 peak of 371,000 barrels a day in 1997 to 235,000 barrels a day in 2008.
But Angola is the country with the most to gain from the Brazilian connection, analysts and geologists say. Angolan state-owned oil company Sonangol recently decided to postpone its next licensing round in part because it wants assess its subsalt layers, which geologists say are similar to Brazil's.
Gaffney Cline's Vining says that, geologically, the subsalt regions of Angola and Brazil were formerly next to each other, and therefore may have similar subsalt petroleum systems.
Says Marcio Mello, chairman of Brazilian geology consultancy and oil company High Resolution Technology & Petroleum, "What exists here [in Brazil], exists there [in Angola], even the rocks containing oil are the same. It's a certainty, not a possibility. Giant deposits will be found there."
Consultancy IHS Global Insight said in a recent report that "the ultra-deepwater prospects are expected to garner particular interest due to common geological features with Brazil's sub-salt areas."
BP has already made at least five significant discoveries in the Angolan subsalt.
By early 2011, U.S. independent oil company Cobalt International Energy Inc. intends to drill subsalt wells in Angola. At the turn of the year, the Houston, TX-based company raised $1 billion -- the largest ever U.S. IPO for an exploration and production company -- partly on hopes they will contain reservoirs similar to those found in Brazil.
It paid $24 million for the Angolan licenses in 2007.
The company says the two geological structures it is set to drill there could hold 4.8 billion barrels of oil, based on seismic imaging analyzed by U.S. geological firm DeGolyer and MacNaughton.
Cobalt also has key assets in the U.S. Gulf of Mexico, which Chevron's Baltz says also has similarities with Angola's offshore.
Sebastiao Gaspar Martins, head of research at Sonangol, says that "if Brazil is talking about billions [of barrels in reserves], I think we can also think in terms of billions" in Angola, because the subsalt reservoirs are "practically the same" on both sides of the Atlantic.
The search for oil beneath the salt in Angola is set to intensify in the coming months. Sonangol plans to drill one or two subsalt wells there between this year and 2012, Martins says.
Houston-based Vaalco Energy Inc. is set to drill Angolan prospects that include subsalt reservoirs early next year. And U.K. oil independent Soco International PLC intends to drill a subsalt well in the neighboring Democratic Republic of Congo in the second half of this year.
To be sure, there are dangers to overstating the geological similarity to Brazil. Soco's deputy chief executive and chief financial officer, Roger Cagle, warns that the company's prospects in West African subsalt aren't on the same scale as those in Brazil. He says the Congolese subsalt prospects Soco is looking to drill could carry 600 million barrels of recoverable oil equivalent.
High Resolution's Mello warns that Angolan subsalt reservoirs may not lie at the same depth as Brazil's, which increases the likelihood of finding natural gas rather than more-valuable oil.
Thom Payne, an analyst at U.K.-based consultancy Douglas-Westwood, also tempers optimism with caution. "There could be big reserves, but you need to see how much of that you can get out of the ground," Payne said, adding that the cost of developing the subsalt region off Africa could be very high.
"Companies will observe very closely at what cost Petrobras will end up developing the Brazilian subsalt reserves. "Drilling below the salt layer is expensive. Payne says exploring the Angolan subsalt region will probably be very capital-intensive and technologically challenging because the oil may lie even deeper below the sea bed than in Brazil. "You need very large reserves to make it worthwhile," he said.
Despite the risks and costs, all companies have high hopes of finding more oil when subsalt drilling intensifies. And when it comes to drilling Angola's offshore, Chevron's Baltz says "we've only begun to scratch the surface."
2010-04-08
Sinopec Group Completes $1.3 Billion Brazil Pipeline
China Petrochemical Corp., the nation's second-biggest energy producer, completed a $1.3 billion natural-gas pipeline in Brazil before a visit by Chinese President Hu Jintao seeking to deepen bilateral ties.
The 1,377-kilometer (856-mile) link is the company's largest overseas service contract, Sinopec Group, as China Petrochemical is known, said in a statement on its Web site yesterday. The pipeline goes through 72 cities and can transport 20 million cubic meters of gas a day, according to the statement.
China is expanding investment in Brazil's oil, mining and steel industries to meet rising demand in the world's fastest- growing major economy. During Hu's visit on April 15-16, Wuhan Iron & Steel Group will sign a contract with Brazilian port operator LLX Logistica SA to build a $4.7 billion steel plant, O Estado de S. Paulo reported on March 28.
Brazil and China may also announce a $10 billion loan agreement between Petroleo Brasileiro SA and China Development Bank Corp., the Sao Paulo-based newspaper said, without saying where it got the information.
Petrobras, as the Rio de Janeiro-based company is known, received $10 billion of loans from China last year to help finance the development of Tupi field, the largest oil discovery in the Americas in more than three decades.
In return, state-controlled Petrobras has been supplying oil to China, the world's second-biggest energy user and Brazil's leading trade partner in 2009.
Recent oil discoveries by Petrobras and OGX Petroleo e Gas Participacoes SA show that Brazil's petroleum fields are "virtually virgin," OGX Chairman Eike Batista said on March 31.
The 1,377-kilometer (856-mile) link is the company's largest overseas service contract, Sinopec Group, as China Petrochemical is known, said in a statement on its Web site yesterday. The pipeline goes through 72 cities and can transport 20 million cubic meters of gas a day, according to the statement.
China is expanding investment in Brazil's oil, mining and steel industries to meet rising demand in the world's fastest- growing major economy. During Hu's visit on April 15-16, Wuhan Iron & Steel Group will sign a contract with Brazilian port operator LLX Logistica SA to build a $4.7 billion steel plant, O Estado de S. Paulo reported on March 28.
Brazil and China may also announce a $10 billion loan agreement between Petroleo Brasileiro SA and China Development Bank Corp., the Sao Paulo-based newspaper said, without saying where it got the information.
Petrobras, as the Rio de Janeiro-based company is known, received $10 billion of loans from China last year to help finance the development of Tupi field, the largest oil discovery in the Americas in more than three decades.
In return, state-controlled Petrobras has been supplying oil to China, the world's second-biggest energy user and Brazil's leading trade partner in 2009.
Recent oil discoveries by Petrobras and OGX Petroleo e Gas Participacoes SA show that Brazil's petroleum fields are "virtually virgin," OGX Chairman Eike Batista said on March 31.
New Well Sweetens Tupi's Oil Potential
The new well, 3-BRSA-795-RJS (3-RJS-666), and informally known as Tupi OW, is located in the area of the Tupi Evaluation Plan, at a depth of 2,131 meters below the water line, nearly 270 km of the coast of Rio de Janeiro, and 12.5 km northeast of discovery well 1-RJS-628 (1-BRSA-369), known as Tupi.
The discovery was proven by means of light oil samplings (approximately 25º API) collected via a cable test from reservoirs located at depths greater than those of previously drilled wells and was reported to the National Petroleum Agency (ANP) today. The result reinforces the estimated potential of 5 to 8 billion barrels of recoverable light oil and natural gas in the Tupi pre-salt area.
The Tupi OW well was drilled by Seadrill's West Taurus semisubmersible drilling rig.
The Consortium, formed by Petrobras (65% - Operator), BG Group (25%), and Galp (10%), to explore block BM-S-11, where Tupi is located, will carry on with the activities and investments called for in the Evaluation Plan which was approved by the ANP and foresees the drilling of other wells until the declaration of commerciality, which is expected to be made in December 2010.
More Brazilian success for Anadarko
Published: Apr 8, 2010
Offshore staff
HOUSTON -- A drillstem test of the Wahoo #1 in the deepwater pre-salt Campos basin offshore Brazil flowed at a rate of 7,500 b/d of oil and 4 MMcf/d of gas, reports Anadarko Petroleum Corp.
The well, in block BM-C-30, is producing 31° API crude and the flow is limited by equipment.
"Next, we plan to move the equipment to our Wahoo #2 well, approximately 5 mi (8 km) to the north, to conduct a second drillstem test," says Bob Daniels, Sr. VP, Worldwide Exploration. "The data from these tests will be important as the partnership works to select an optimum development plan for the field, which has an estimated gross resource potential of more than 300 MMbbl of oil."
Anadarko as operator holds 30% working interest, Devon Energy Corp. has 25%, IBV Brasil Petróleo Ltd. and Videocon Industries have 25%, and SK Energy Co. the remaining 20%.
Offshore staff
HOUSTON -- A drillstem test of the Wahoo #1 in the deepwater pre-salt Campos basin offshore Brazil flowed at a rate of 7,500 b/d of oil and 4 MMcf/d of gas, reports Anadarko Petroleum Corp.
The well, in block BM-C-30, is producing 31° API crude and the flow is limited by equipment.
"Next, we plan to move the equipment to our Wahoo #2 well, approximately 5 mi (8 km) to the north, to conduct a second drillstem test," says Bob Daniels, Sr. VP, Worldwide Exploration. "The data from these tests will be important as the partnership works to select an optimum development plan for the field, which has an estimated gross resource potential of more than 300 MMbbl of oil."
Anadarko as operator holds 30% working interest, Devon Energy Corp. has 25%, IBV Brasil Petróleo Ltd. and Videocon Industries have 25%, and SK Energy Co. the remaining 20%.
2010-04-05
Deal For Comperj Coke
Petrobras signed a contract with the Techint / Andrade Gutierrez consortium for the construction of a delayed coking unit at the Rio de Janeiro Petrochemical Complex (Comperj). The contract value was not disclosed by the oil company, but the work is quoted in the market at R$ 1.8 billion (US$ 1.01 billion).
The Comperj first phase calls for a first generation refinery to produce basic petrochemicals. The unit will produce 1.3 million tons/year of ethylene and 880,000 tons/year of propylene, processing 200,000 b/d of heavy oil as of 2013.
The Comperj first phase calls for a first generation refinery to produce basic petrochemicals. The unit will produce 1.3 million tons/year of ethylene and 880,000 tons/year of propylene, processing 200,000 b/d of heavy oil as of 2013.
Eisa Shipyard to Construct 4 Vessels under Brazil's 'Promef'
Transpetro, the Eisa Shipyard, and the National Development Bank (BNDES) signed, on March 31, the financing contracts for the construction of four Panamax-type vessels under the Fleet Modernization and Expansion Program (Promef). After the signatures, Eisa will start executing the contracts, worth a global amount of R$856 million and for the construction of four vessels, next week.
The first Panamax, with 70,000 tons of deadweight and capacity for 500,000 barrels, is slated for delivery by late 2012. The remaining vessels are scheduled for delivery throughout 2013. Four thousand new direct jobs are expected to be created during vessel construction.
In the Promef, this is the third shipyard to establish the efficacy of its contracts, allowing for the release of funds. The Atlântico Sul Shipyard (Suape, Pernambuco) reached this stage in 15 vessels contracted with Transpetro, while the Mauá Shipyard (Niterói, Rio), in another four.
The signing of the financing contracts took place in the same week that President Luiz Inácio Lula da Silva launched the second phase of the Growth Acceleration Program (GAP), which prioritizes funding for vessel assembly and modernization, in addition to for the construction and expansion of domestic shipyards.
The Promef's basic premise is the manufacturing of vessels in Brazil, with 65% domestic content (first phase), 70% (second phase), and ultimately achieving international shipyard competitiveness after the learning curve has been reached.
The Promef -- which revitalized the Brazilian naval industry -- has already generated 15,000 direct jobs in Brazil, a number that is expected to grow 40,000. The program, launched in 2004, provides for the construction of 49 vessels, adding four million deadweight tons of maritime shipping. Contracts have already been signed for the construction of 33 vessels, the construction work for which is worth a total of $3.9 billion. The two first Promef vessels will set sail in the first half of this year, one of which a Suezmax vessel from the Atlântico Sul Shipyard, and the other a products ship from the Mauá Shipyard.
With the Transpetro program, Brazil already has the fifth largest oil tanker order portfolio in the world. The scale generated by the Promef attracted new investors to the naval sector, has spurred the ship part industry, and is driving the construction of repair shipyards in Brazil
The first Panamax, with 70,000 tons of deadweight and capacity for 500,000 barrels, is slated for delivery by late 2012. The remaining vessels are scheduled for delivery throughout 2013. Four thousand new direct jobs are expected to be created during vessel construction.
In the Promef, this is the third shipyard to establish the efficacy of its contracts, allowing for the release of funds. The Atlântico Sul Shipyard (Suape, Pernambuco) reached this stage in 15 vessels contracted with Transpetro, while the Mauá Shipyard (Niterói, Rio), in another four.
The signing of the financing contracts took place in the same week that President Luiz Inácio Lula da Silva launched the second phase of the Growth Acceleration Program (GAP), which prioritizes funding for vessel assembly and modernization, in addition to for the construction and expansion of domestic shipyards.
The Promef's basic premise is the manufacturing of vessels in Brazil, with 65% domestic content (first phase), 70% (second phase), and ultimately achieving international shipyard competitiveness after the learning curve has been reached.
The Promef -- which revitalized the Brazilian naval industry -- has already generated 15,000 direct jobs in Brazil, a number that is expected to grow 40,000. The program, launched in 2004, provides for the construction of 49 vessels, adding four million deadweight tons of maritime shipping. Contracts have already been signed for the construction of 33 vessels, the construction work for which is worth a total of $3.9 billion. The two first Promef vessels will set sail in the first half of this year, one of which a Suezmax vessel from the Atlântico Sul Shipyard, and the other a products ship from the Mauá Shipyard.
With the Transpetro program, Brazil already has the fifth largest oil tanker order portfolio in the world. The scale generated by the Promef attracted new investors to the naval sector, has spurred the ship part industry, and is driving the construction of repair shipyards in Brazil
Aker Solutions signs service contract with Petrobras
Aker Solutions has signed a three-year contract with Petrobras for maintenance of subsea control systems supplied to the Brazilian national oil company. The contract value is BRL 30 million (NOK 100 million).
The contract will be managed from Aker Solutions' service base in Rio das Ostras, through a specialised Brazilian team.
Scope of work comprises maintenance, supply of parts and offshore operations on control systems already installed, and on their respective tests and installation tools, which are held onshore. The contract also covers maintenance of equipment installed on platforms, including the HPU (hydraulic power unit) and EPU (electrical power unit).
The contract also allows new equipment to be included within the maintenance scope of work as subsequent deliveries are being made, such as the manifolds for the Albacora field and the Tupi subsea trees, which are all equipped with control systems.
"This contract reflects our intention to establish partnerships throughout the subsea equipment lifecycle, from engineering and manufacturing through to life-of-field maintenance," says Marcelo Taulois, president of Aker Solutions' subsea business area in Brazil.
"Through significant investments in our modern Rio das Ostras subsea service base, we are well prepared to meet the growing demand for maintenance services in Brazil," concludes Taulois.
Aker Solutions' contract party is Aker Solutions do Brasil Ltda.
The contract will be managed from Aker Solutions' service base in Rio das Ostras, through a specialised Brazilian team.
Scope of work comprises maintenance, supply of parts and offshore operations on control systems already installed, and on their respective tests and installation tools, which are held onshore. The contract also covers maintenance of equipment installed on platforms, including the HPU (hydraulic power unit) and EPU (electrical power unit).
The contract also allows new equipment to be included within the maintenance scope of work as subsequent deliveries are being made, such as the manifolds for the Albacora field and the Tupi subsea trees, which are all equipped with control systems.
"This contract reflects our intention to establish partnerships throughout the subsea equipment lifecycle, from engineering and manufacturing through to life-of-field maintenance," says Marcelo Taulois, president of Aker Solutions' subsea business area in Brazil.
"Through significant investments in our modern Rio das Ostras subsea service base, we are well prepared to meet the growing demand for maintenance services in Brazil," concludes Taulois.
Aker Solutions' contract party is Aker Solutions do Brasil Ltda.
2010-04-01
Asian Cos Participate in Pre-Salt Brazil FPSO Charter
Source: Mitsubishi Corp
Date: 03/31/2010 15:20
MODEC, Mitsui, Mitsubishi and Mitsui O.S.K. Lines have agreed to invest in the chartering of an FPSO to the Brazilian national oil company (Petrobras). The facility is being supplied to Petrobras for use at the giant deepwater pre-salt oil field currently under development off the Brazilian coast.
Mitsui & Co., Ltd., Mitsubishi Corporation and Mitsui O.S.K. Lines finalized their capital investment in the Dutch company Tupi Pilot MV22 B.V. (hereinafter "MV22"), the subsidiary established by MODEC, Inc. to undertake this project. Further, on 30th March 2010, MV22 procured the financing for the project from the Japan Bank for International Cooperation and private Japanese banks and signed the loan agreement.
MODEC, Inc. has been converting an existing VLCC (Very Large Crude Carrier) tanker into an FPSO under the ownership of MV22 for charter to Petrobras. The FPSO is expected to be engaged in oil production for 15 years (with an annual extension option) at the pre-salt area oil field off the Brazilian coast and the operation will commence at Tupi area in the 4th quarter of 2010.
Off the Brazilian coast, the vast oil reserves lie beneath a layer of rock and salt at a depth of between 5,000 and 6,000 metres. It is estimated that more FPSOs will be required to fully develop the area. As the world's first attempt to develop oil deposited beneath a layer of rock and salt, the oil industry shows strong interest on the progress of this project.
Date: 03/31/2010 15:20
MODEC, Mitsui, Mitsubishi and Mitsui O.S.K. Lines have agreed to invest in the chartering of an FPSO to the Brazilian national oil company (Petrobras). The facility is being supplied to Petrobras for use at the giant deepwater pre-salt oil field currently under development off the Brazilian coast.
Mitsui & Co., Ltd., Mitsubishi Corporation and Mitsui O.S.K. Lines finalized their capital investment in the Dutch company Tupi Pilot MV22 B.V. (hereinafter "MV22"), the subsidiary established by MODEC, Inc. to undertake this project. Further, on 30th March 2010, MV22 procured the financing for the project from the Japan Bank for International Cooperation and private Japanese banks and signed the loan agreement.
MODEC, Inc. has been converting an existing VLCC (Very Large Crude Carrier) tanker into an FPSO under the ownership of MV22 for charter to Petrobras. The FPSO is expected to be engaged in oil production for 15 years (with an annual extension option) at the pre-salt area oil field off the Brazilian coast and the operation will commence at Tupi area in the 4th quarter of 2010.
Off the Brazilian coast, the vast oil reserves lie beneath a layer of rock and salt at a depth of between 5,000 and 6,000 metres. It is estimated that more FPSOs will be required to fully develop the area. As the world's first attempt to develop oil deposited beneath a layer of rock and salt, the oil industry shows strong interest on the progress of this project.
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