New discovery in Campos Basin Pre-Salt

Petrobras announces the discovery of a new oil accumulation in the Campos Basin pre-salt, through well 6-AB-119D-RJS drilled in the Albacora field, 107 km off the coast and only 3.2km from the drilling rig P-31. Preliminary volume estimates indicate an economically recoverable volume potential of approximately 350 million barrels of good quality oil (light).

Drilled at a water depth of 380m, it reached the total depth of 4835m, where an oil column of 241m was found, of which 104m are from the carbonate reservoirs of the Macabu Formation, with porosity around 10%.
This discovery will be the object of the Assessment Plan to be opportunely submitted to the ANP. The execution of the Long Duration Test to investigate the production behavior of this new accumulation will be decided after the assessment of the cased-hole drill-stem tests (CHDST) programmed for two ed intervals.

Petrobras Agency

Date: 29/04/2011 14:18

Production starts up at Northeast area of Lula field

Petrobras announces that it started the Extended Well Test (EWT) in the northeastern area of Lula Field, in the Santos Basin pre-salt, approximately 300 kilometers off the coast of Rio de Janeiro.

The EWT is taking place in the FPSO BW Cidade de São Vicente, anchored at a depth of 2,120 meters. Production should remain at around 14 thousand barrels of oil per day.

The information obtained in the test of Lula Nordeste will aid studies for the development of the project of the second definitive production system to be installed in the Lula field, called Lula Nordeste Pilot, through FPSO Cidade de Paraty.

The EWT of Lula Nordeste is a project of the consortium frmed by Petrobras (operator, with 65% interest), BG Group (25%) and Galp Energia (10%).

Fonte: Petrobras Agency

Wind energy in Brazil - ABB, Suzlon and Martifer working in wind power

ABB has won orders worth about $19 million from Suzlon, the world's third-largest manufacturer of wind turbines to serve Martifer Renovable´s wind farm plants installed in the states of Ceará and Rio Grande do Norte.
ABB will design, supply and install two 230 kV main substations and 104 unitary 36 kV Compact Secondary Substations (CSS). Each wind turbine will be fitted with a fully automated unitary substation enabling real-time tracking and operation from a monitoring center in Fortaleza, and maximizing availability of the wind farms.
Key equipment to be supplied with this wind power order includes low-loss distribution transformers and a range of medium voltage switchgear. Substations are key installations in the power grid. They transform voltage levels and facilitate the efficient transmission and distribution of electricity. They include equipment that protects and controls the flow of electrical power.

Brazil's Petrobras to appeal local content fine

RIO DE JANEIRO, April 27 (Reuters) - Brazilian state oil company Petrobras  is appealing a government fine for not purchasing enough of its goods and services from local suppliers, a company director said on Wednesday.

Brazil has pushed oil companies to buy offshore equipment from local providers to spur its oil services industry, although critics say this will boost costs for companies tapping the country's vast deepwater oil reserves.

"We are appealing it," Petrobras Exploration and Production Director Guilherme Estrella said on Wednesday on the sidelines of an industry event. "We are in conversations with (the government) about local content."
A director of Brazil's ANP energy regulator last week said the agency could fine Petrobras up to 28 million reais ($18 million) for not adequately demonstrating it had met local content requirements, according local media reports.
Licenses for Brazilian offshore blocks establish a minimum percentage of equipment such as offshore platforms or subsea systems that must be bought from local suppliers. The percentage varies from block to block.

Brazil Petrobras March Total Gas, Oil Output At 2.614M BOE/Day

RIO DE JANEIRO (Dow Jones)--Brazilian state-run energy giant Petroleo Brasileiro (PBR, PETR4.BR), or Petrobras, said Tuesday that total crude oil and natural gas production rose 2.3% year-on-year in March.


Petrobras produced 2.614 million barrels of oil equivalent, or BOE.

Petrobras domestic crude oil output also advanced 2.3% year-on-year in March to 2.04 million barrels a day. That was also up from 2.02 million barrels a day in February. Petrobras also produced 142,200 barrels of crude a day from its international operations.

Several platforms that had been shuttered for maintenance return to operation during the month, while the company also started an extended well test at the Sidon field in the Santos Basin, Petrobras said. Petrobras' crude oil production should continue to grow in 2011 as several key projects ramp up output, including the pilot production project at the Lula field and the P-57 platform at Marlim.

Natural gas output, meanwhile, was up 4.6% in March versus the same month last year, although output was down fractionally from February, Petrobras said. Domestic natural gas output was 53.467 million cubic meters a day in March, while international operations yielded 16.239 million cubic meters a day.

Five Campos basin presalt discoveries now on production

HOUSTON, Apr. 20 -- With the start of an extended well test (ETW) on the Brava presalt discovery well , Petroleo Brasileiro SA (Petrobras) now has five presalt discoveries on production in the Campos basin off Brazil.


Production started from Jubarte during September 2008, Baleia Franca during July 2010, Carimbe ETW in the Caratinga area during December 2010, Tracaja ETW in the Marlim Leste area during February , and Brava ETW in the Marlim area during April.


Petrobras in its announcement on the start of Brava presalt production had incorrectly stated that it only had three presalt discoveries on production in the Campos basin.

Visit Khen Group to start up your Business in Brazil!

Statoil starts Peregrino; makes adjacent find

HOUSTON, Apr. 15 -- Norway’s Statoil made a oil discovery south of Peregrino heavy oil field in the Campos basin off Brazil even as it started production from the field earlier this month.


An exploratory well drilled in 120 m of water 85 km east of Rio de Janeiro on the Peregrino South structure a few kilometers south of Peregrino encountered oil in sandstones of the Tertiary Carapebus formation.


Statoil will perform further work to confirm volumes after the well cut a 130-m gross oil column. Drilling continued to probe deeper reservoir units and explore potential below the main reservoir, the company said.


Statoil said the well’s results verify upside potential in the general area and, added to the 2007 Peregrino Southwest discovery, will play an important role in further development.


After it completes the Peregrino South well, Statoil will drill one more appraisal well at Peregrino Southwest to determine the overall size of the new development.


Oil production began from Peregrino field in early April. It is to ramp gradually to a plateau of 100,000 b/d of oil equivalent (OGJ Online, Feb. 9, 2011). The initial development is estimated to hold 300-600 million boe recoverable.


Applying produced water injection, horizontal wells, and flow assurance to sustain the project over a longer-term, Statoil has doubled the initial recovery factor to 20%. Peregrino’s producing life is expected to extend until 2040.


Statoil in May 2010 sold a 40% stake in Peregrino field to the Sinochem Group. Statoil holds 60% and remains operator.

Google plans to tap Brazil’s fertile market

By Samantha Pearson in São Paulo

Published: April 22 2011 23:02 | Last updated: April 22 2011 23:02

Google expects revenue from its Brazilian operations to surge 80 per cent this year as the government pours huge amounts of investment into the sector, making the country one of the company’s most promising growth markets.

Giving Brazil’s poor more access to the internet and improving connection speeds is a priority of the country’s new president, Dilma Rousseff, who sees the web as the best way to accelerate social and economic development.

“Brazil is a beautiful opportunity for the digital world,” said the head of Google’s Brazilian subsidiary, Fábio Coelho, in an interview with the Financial Times. “Last year we grew 80 per cent in Brazil in terms of revenue and we expect to grow at the same pace this year.”

Latin America accounted for 2-3 per cent of Google’s $29.3bn revenue last year, with analysts estimating that Brazil brought in as much as $500m.

As more Brazilians move into the middle classes and buy their first computer, internet usage has soared.

But even as the economy slows this year, private and public investment under the country’s National Broadband Plan should keep up the momentum of growth in the sector.

“Brazil has a very low broadband penetration and out of 200m or more mobile phones, only about 12m to 14m are smart phones. Most are pre-paid,” Mr Coelho said. “There is a big eco-system to be developed here.”

This week, Paulo Bernardo, the communications minister, said Brazil’s government could spend up to R$1bn (US$640m) a year until 2014 to improve internet services, making the country an attractive destination for Google at a time when it is struggling with censorship issues in other emerging markets such as China and Russia.

Google Brazil plans to increase its workforce by 50 per cent this year from the current 350, said Mr Coelho, who joined the company last month after almost a decade at AT&T and stints at Citi and Gillette.

As well as growth in advertising via YouTube and the rising popularity of the Android mobile phone platform, Mr Coelho is optimistic about Orkut, Google’s social networking site and one of Facebook’s big competitors. Facebook overtook Orkut in India last year and has fast been gaining popularity among young Brazilians, but Orkut still has about four times as many users in Brazil.

Timeline: Brazil

A chronology of key events:

Know more and vist us at: www.khen-group.com

1500 - Portuguese land in the area and claim it to the Portuguese crown.

1822 - Son of Portuguese king declares independence from Portugal and crowns himself Peter I, Emperor of Brazil.

1888 - Slavery abolished. Large influx of European immigrants over the next decade.

1889 - Monarchy overthrown, federal republic established with central government controlled by coffee interests. Brazil produces 65% of world's coffee by 1902.

1930 - Revolt places Getulio Vargas at head of provisional revolutionary government.

1937 - Vargas leads coup, rules as dictator with military backing. Economy placed under authoritarian state control, start of social welfare revolution and reform of laws governing industry.

1939-45 - Brazil initially declares itself neutral but in 1943 joins Allies in World War II.

1945 - Vargas ousted in military coup. Elections held under caretaker government. New constitution returns power to states.

1951 - Vargas elected president, but faces stiff opposition.

1954 - Vargas commits suicide after military gives him the options of resigning or being overthrown.

1956-61 - Juscelino Kubitschek is president, helping Brazil achieve rapid economic growth.

1960 - Kubitschek moves capital to Brasilia.

1960 - Janio Quadros elected president, but resigns after several months, plunging country into constitutional crisis. Succeeded by left-wing vice-president Joao Goulart.

Military rule

1964 - Goulart ousted in bloodless coup, flees into exile. Military rule associated with repression but also with rapid economic growth based on state-ownership of key sectors.

1974 - General Ernesto Geisel becomes president, introduces reforms which allow limited political activity and elections.

1982 - Brazil halts payment of its main foreign debt, which is among the world's biggest.

1985 - Tancredo Neves elected first civilian president in 21 years under the electoral college system set up by the military, but falls ill before he can be inaugurated and dies shortly afterwards. His vice president Jose Sarney becomes president at time of economic crisis.

1986 - Sarney introduces Cruzado Plan, freezing prices and wages in effort to control inflation. But inflation explodes when freeze is lifted.

1988 - New constitution reduces presidential powers.

Economic woes

1989 - Fernando Collor de Mello becomes first directly elected president since 1960. Introduces radical economic reform but promised economic improvements fail to materialise, and inflation remains out of control.

Foreign debt payments are suspended.

1992 - Earth Summit in Rio.

Collor resigns after being accused of corruption. He is later cleared. Replaced by vice president Itamar Franco.

1994 - Fernando Henrique Cardoso elected president after helping to bring inflation under control. Makes controversial moves on land issue, seizing land for distribution among poor, and allowing indigenous land claims to be challenged.

1995 - President Cardoso acknowledges the existence of slavery in Brazil and pledges to tackle the problem.

1996 - Police kill 19 Amazon peasants in town of Eldorado dos Carajas.

1997 - Constitution changed to allow president to run for re-election.

1998 - Cardoso re-elected. IMF provides rescue package after economy hit by collapse of Asian stock markets.

2000 - Celebrations to mark Brazil's 500th anniversary marred by protests by indigenous Indians, who say that racial genocide, forced labour and disease have dramatically cut their population from an estimated 5 million before the Portuguese arrived in 1500 to the current 350,000.

2001 - Government says it is prepared to amend a development programme which critics say will have a catastrophic impact on the Amazon. Government expects to spend $40 billion over seven years on roads, railways, hydroelectric projects and housing in the Amazon basin.

2001 May - President Cardoso abolishes two development agencies for the Amazon and the north-east. The authorities say the agencies set up bogus projects to steal development funds estimated at more than $1 billion.

2002 March - Members of the Landless Workers Movement, demanding land reform, occupy President Cardoso's family ranch.

2002 June - Fans jubilant as Brazil triumphs in World Cup - the football-mad country's fifth such victory.

2002 July - Currency hits all-time low and financial markets panic over the prospect of left-winger Luiz Inacio Lula da Silva winning October's presidential elections.

Lula elected

2002 October - Luiz Inacio Lula da Silva, popularly known as Lula, wins presidential elections. The former shoeshine boy heads Brazil's first left-wing government for more than 40 years. At his inauguration in January 2003 he promises political and economic reforms and pledges to eradicate hunger.

2003 August - Space rocket explodes on the ground at the Alcantara launch base, killing 21 people.

2004 April - Wave of land invasions, dubbed "Red April" by activists.

2004 September - Brazil, along with Germany, India and Japan, launches an application for a permanent seat on the UN Security Council.

2004 October - Brazil launches its first space rocket.

2005 February - Murder of US-born missionary and campaigner for Amazon peasant farmers Dorothy Stang throws conflict over land and resources in Amazon into spotlight. Government unveils plan to protect part of region from encroachment.

2005 March - Death squad kills at least 30 people on the outskirts of Rio de Janeiro, the city's worst massacre in over a decade. It is suggested that rogue police are responsible.

2005 June-August - Corruption allegations rock the governing Workers' Party. A wave of resignations ensues. The president makes a televised apology.

2005 October - Voters in a referendum reject a proposal to ban the sale of firearms.

2006 May - Scores of people are killed in gang attacks and a police backlash in Sao Paulo state. The violence is sparked by a series of prison uprisings.

2006 October - President Lula is re-elected.

2007 July - Anti-slavery team frees more than 1,000 people from a sugar-cane plantation in the Amazon.

2007 August - Government officially recognizes for first time human rights abuses carried out under military dictatorship between 1964 and 1985. More than 500 people are believed to have been killed or "disappeared".

2007 December - The speaker of the Brazilian Senate and a key ally of President Lula, Renan Calheiros, resigns in order to avoid an imminent impeachment hearing following a long-running corruption scandal.

2008 January - The EU halts all imports of Brazilian beef, saying its foot-and-mouth disease checks are "unacceptable".

2008 May - Environment minister Marina Silva resigns, after conflicts with the government over Amazon development.

2008 July - A congressional commission rejects a bid to legalise abortion in the world's most populous Catholic nation.

2008 August - Government launches scheme offering cash payments and immunity for illegal weapons, in an effort to get 300,000 guns off the streets.

2008 September - President Lula suspends intelligence chiefs amid allegations their agencies spied on officials, politicians and judges.

2008 October - Brazil turns down an invitation from Iran to join the international oil cartel, Opec.

2009 June - Brazil says it will offer $10bn to the International Monetary Fund, to help improve the availability of credit in developing countries.

2009 July - Brazil and Paraguay reach a deal to end their long-running dispute over the cost of energy from the giant Itaipu hydro-electric plant on their border.

2009 October - The government says it is to set up a truth commission to investigate abuses committed during military rule in Brazil from 1964 to 1985.

2009 November - Brazil's two largest cities - Rio de Janeiro and Sao Paulo - are hit by major blackouts due to a problem at a massive hydro-electric dam.

2010 March - President Lula begins push for bigger Brazilian diplomatic role with visit to Middle East. Weeks later he goes to Iran.

2010 August - Brazil gives formal approval for construction of controversial hydroelectric dam in the Amazon rainforest, expected to be the world's third largest.

2010 October - Dilma Rousseff, of President Lula's Workers' Party, wins second round run-off to become Brazil's first female president.

2011 January - Opening of controversial road connecting Brazil's Atlantic coast with Peru's Pacific seaboard.

BW Offshore: The Most Advanced FPSOs in Brazil

Wednesday, April 20, 2011

“Brazil looks like it will become the largest FPSO market in the world and we want to participate..” -- Jon Harald Kilde M.S.c., GM, BW Offshore The abundance of deepwater O&G prospects, combined with the lack of oil transportation infrastructure in Brazil, has increasingly favored FPSOs as a production solution. Petrobras presently has more than 25 FPSOs in operation and this number is expected to double during the next decade. BW Offshore is a leader in FPSOs and FPSO operations. Although it has been quoting for jobs in Brazil for some years, the company finally established a local office in 2008. BW Offshore currently has three FPSOs operating in the Brazilian offshore and has another one slated to be delivered by the end of the year. The Rio de Janeiro office is headed by General Manager Jon Harald Kilde M.S.c., who shared with Maritime Reporter´s correspondent in Brazil, Claudio Paschoa, the company’s strategy and outlook.

Brazil Operations History



Jon Harald Kilde first came to Brazil in 1988 to work for Petrobras through Brasnord. Thereafter he returned a few time to Brazil on business trips but only moved again to Brazil in 1999. Over the years he has built a good and lasting business relationship with Petrobras executives, also learning how to do business in Brazil, having experienced various phases of growth in the Brazilian O&G market. In 2008 he returned to live in Brazil in order to negotiate contracts for BW Offshore and set up the company´s main office in the country.



According to Kilde, “Only one month after opening the Rio de Janeiro office, we were awarded the contract operate the FPSO BW Cidade de São Vicente (BW CdSV) at the Tupi (now re-named Lula) pre-salt field by Petrobras, it was a very good start”. The FPSO will operate as a long term testing facility for the pre-salt reservoirs, starting with the TUPI cluster and changing location annually.



The fact that BW Offshore was capable of delivering the BW CdSV in a record time of 11 months permitted Petrobras to fulfill its promise to the Brazilian government of producing oil from the pre-salt reservoirs within one year. This accomplishment placed BW Offshore in a position for future contracts with Petrobras, as a preffered FPSO supplier. The importance of the first oil in Tupi on May 1, 2009 to the Brazilian government, was illustrated by the enthusiastic celebration led by then Brazilian President Luis Inacio “Lula” da Silva and highlights the importance given to the pre-salt discoveries throughout Brazil.“The customer relationship with Petrobras is excellent, which helps in the pursuit of further projects in and outside Brazil” says Kilde. He also emphasized the importance given by Petrobras to continuity, especially concerning the executives they have contact and negotiate with.

Could you tell us what changes have occurred in BW Offshore since mid 2010?

The main changes were the sale of our technology research division APL to National Oilwell Varco and our buy out of our direct competitor, Prosafe.

How did these changes influence the company?

The changes influenced a lot of things here in Brazil, for example, Prosafe was double our size in Brazil, so now we have 250 employees and three FPSOs operating in Brazil, with another one due to arrive by the end of the year (The Papa-Terra FPSO).
So which FPSOs are operating in Brazil?

There is the Cidade de São Vicente FPSO, which was the first to work the pre-salt and was at the Tupi field EWT. There is the Polvo FPSO contracted to Devon. The Cidade de São Mateus FPSO which is working the Camarupim field for Petrobras. We are expecting the Papa Terra FPSO to be delivered from the shipyard where it is being built in Singapore, by the end of the year. It will be operating the Papa Terra field in the Campos Basin.

What about the BW Pioneer FPSO that was contracted by Petrobras for the Cascade & Chinook field at the GOM?



It is very close to begin production. The plan is to begin production by the end of next week (late March). It will be the first FPSO on the American side of the GOM, we already have a large FPSO operating on the Mexican side (the largest FPSO in the world), therefore with the BW Pioneer starting operations we will have the only two FPSOs operating at the GOM.

How many FPSOs does BW Offshore have operating in West Africa?



Many! Our total in Africa is 13 or 14 FPSOs in operation.

How did the acquisition of Prosafe affect BW Offshore´s earnings?

With Prosafe we now have a truly global reach, for you to have an idea… we have a back log of $8 billion. The forecast is for us to have yearly earnings of around $400 million dollars.

What can you tell us about the APL sale?

The APL sale was really a win-win situation as now APL is owned by a business that has its same characteristics, such as mechanical and hydraulic technology, with a global infrastructure for these kinds of products and services. I think it will be good for them. They will have a bigger market.

We are a now a bigger company with Prosafe coming aboard but we still have technological agreements with APL, so I see the sale as a win-win for my company.

How do you see the business possibilities for your company in Brazil in the near future?



Brazil looks like it will become the largest FPSO market in the world and we want to participate. However, we need to evaluate the business prospects here in relation to other alternatives. Our preference would be for a more selective market in the future. One person might say that business is better here and another say that it is better elsewhere, but the final decision comes from our board of directors. My job in Brazil is to show the business possibilities here. For example, projects with Petrobras are long term solid contracts but all the demands, such as local content, makes things more complex. As a new and bigger company, after the acquisition of Prosafe, we definitely have a financial base strong enough to take on large projects. We still need to see what the future holds.

We had to decline the last Petrobras tender as we already have four ongoing international projects and we are in the midst of integrating the companies. I explained this to Petrobras and they understood. Now we are preparing ourselves for future tenders.

How do you see the prospects for the worldwide FPSO market?

The FPSO market is also growing worldwide but no other region is growing more than Brazil. It´s looking good, we have good prospects in major production areas such as Asia, Africa and the GOM, in the North Sea we also have prospects. In terms of quantity of FPSOs in demand, the forecast is very good for the next five to 10 years.

Which are the main challenges you face in Brazil? Do you still face major challenges in securing a specialized workforce or are things better now?



Unfortunately the problem with local workforce is even worse. Here in Brazil the local content demand and lack of resources, such as specialized workers and local manufacturing capacity makes for a complicated combination. You can demand local content but if these resources are not available it makes things very complicated. That´s why we are seeing a steep upward spiral in the O&G industry salaries, in Brazil. I have never seen anything like it. There are indexes for salary increases, but what is happening in the industry today is a salary rise way beyond the highest index figures.

How do you deal with this local content problem?

Concerning local content, thank God we have three FPSOs operating at the same time in Brazil, which means we have a good base of Brazilian workers. But we are seeing that to guarantee the future in term of offshore workforce, we need to train them since school, we can´t just fight for workers with other companies and try to take their workers, as they will just go and try to take workers from us later. You need to create new candidates and this will need to be done early, from when candidates begin technical school. We are forming partnerships with technical schools in various places. There is one project being negotiated with a school in Vitória, capital of the state of Espirito Santo, which looks promising and we are also looking at technical schools in Rio de Janeiro, in the city of Macaé. This is the first option, there are other alternatives but this is what we are doing now.


What new technologies are you working on?

We are working on an FLNG project, we believe this market will happen but not immediately because of various aspects concerning the gas market and also concerning technical aspects of the project, we are investing in the technologies involved and we believe in this market and that it will grow in Brazil too.

We have also done projects with extreme technologies, for example the FPSO on the Mexican side of the GOM is the largest in the world. The FPSO in the American side of the GOM is in the deepest water at 2,700 meters.

We have these technologies and now we want to be building on the technologies we already have, constantly looking for new things. In order to secure a definite profit it is better to work on continuity. We will always work with new technologies but our focus now is to give continuity to the technologies we already have.

Which are your main clients in Brazil and worldwide?

Well, I told you about of $8 billion backlog. 35% of this total is from Petrobras, which means that Petrobras is much bigger than any other client for us. Next in line comes Apache with 11%.

What about the OSX 1 FPSO?

Last year when we spoke, I commented on the possibility of working on this project and now we are doing this project for OSX. It isn´t really a conversion, it was a new built FPSO, originally built for a company called Nexus, which invested and speculated in the FPSO market by making this generic project. When we bought APL in 2007, we were in a good position, as APL owned 50% of Nexus. What happened is that OSX basically bought the FPSO from the bank but with our technology aboard we got the contracts to adequate this new FPSO for the first OGX field, called Waimea. The FPSO is being fitted out in Singapore and will be completed in a few months, then it will sail to Brazil. It is a project where we are doing the engineering and project modifications but they will operate it.

How do you work with equipment suppliers here in Brazil?

In the Papa terra project, for example, we made a joint venture with Quip that is making modules in Brazil while we are making the modules outside Brazil.

We have two teams working with suppliers, one for technical support, which works with a listing of companies specialized in offshore construction and various other services. The other team works with supplies, buying supplies from companies in Brazil, as 85% of our supplies need to be bought in Brazil.



For now, we are not building new FPSOs in Brazil. We are open to it but for now we have no plans to build in Brazil. Our relation with Quip is very good and for now we are happy with them building in Brazil while we build in the foreign market.



For new projects we will have to see the alternatives. There is still need for more development from EPC suppliers in Brazil, for processing plants for example. These need more development to compete internationally. Some areas of manufacture are competitive here in Brazil, but many areas still need more development in order to be competitive.

Who are your main competitors in Brazil?

Definitely SBM and Modec, other than these there is Teekay and Saipem. We are in third in size in Brazil, with SBM in first and Modec second, other companies only have one FPSO in operation in Brazil.

How are you rated in the world FPSO market?

It depends on how you define it. In size, we are officially second but if we count FPSOs in operation we are in first place but we still consider ourselves second, as SBM has more business related to FPSOs. Our goal is to become number one in the world.

What do you think of the Petrobras initiative to build FPSO at the Rio Grande Shipyard in south Brazil?

I think they will definitely make them with international quality. The problems will be with costs and deadlines. In reality, Brazil will have to choose between maintaining the production goals or maintaining the local content policy. It will be impossible to maintain both, it´s impossible with this 75% local content requirement.

There is no flexibility with this policy but at some point they will have to choose. I see no problem with this because Brazil has the opportunity to develop what is possible, to choose which areas it wants to develop. I think there should be more focus in education. You can build shipyards and many other things but in reality school, starting from lower school, is being developed too slowly. The salaries currently offered to teachers in Brazil are incompatible with serious growth goals.

Do you think there are Brazilian companies capable of competitively building FPSOs locally?

Yes, yes, our partner Quip is a possibility, maybe not in the short run, but there are various companies capable, Odebrecht is another example. These 8 FPSOs to be built in Brazil from new hulls by GVA and Engevix, will give us a good idea of their capabilities. There is also OSX, which has bought two hulls for conversion and their shipyard is also being built. Their idea is to do the conversion and everything else in Brazil, we will see in time. I think that the 19 FPSOs that Eike Batista says he plans to build will also be incompatible with building everything in Brazil. For this reason, I believe that it will be a good opportunity for construction in Brazil and also making the most of the advantages offered by foreign shipyards where there are shorter delivery times and lower prices. I think a combination of these would be best.

How do you see the growth in the O&G market in Brazil for the next decade?

I think that says it all! In the next decade, up to 2020, to triple local production to over 6 billion barrels/year is a bonanza! I hope that the growth will be good and that it will not be like the gold rush, where things go crazy, people try to take personal advantage of the situation and lack of resources that can cause a spiral which will not help anyone. In a spiral like this, while the market is growing too quickly, Brazil would not have a competitive industry. I think that the long term goal must be that Brazil wants to have a competitive industry. As it is today with too many privileges given through local content, will not help at all. There should be local content, but always looking to be competitive internationally and this combination is very difficult to make.

Company History

BW Offshore was incorporated in Bermuda on June 7th 2005 in order to capitalize on the growing demand for FPSOs. The company is a provider of FPSOs and FSOs through operational lease agreements as well as an EPCI (Engineering, Procurement, Commissioning, Installation), contractor of turret mooring systems and offshore terminals. The floating production division of the company has assets operating in the offshore waters of Brazil, Malaysia, Russia, WA and on both sides of the GOM.


BW Offshore has been a pioneer in many respects. It was the first company to operate an LPG FPSO with its operations in Angola. Later the company has converted and installed the first and only Arctic Oil FSO. In 2007, BW Offshore delivered the world's largest converted FPSO, with the biggest throughput capacity of any FPSO. Finally BW Offshore is now operating the first FPSO in the American side of the GOM, with the BW pioneer.

HRT announces new subsidiary in Houston

Date: 04/19/2011 17:49

HRT Participações em Petróleo informed the opening of HRT America Inc., based in Houston, TX. The subsidiary is in charge of all G&G technical matters of HRT’s projects in Africa, having as initial focus the Namibia acreage that will be prepared and ready to be drilled in 2012.


“We are very excited about the creation of HRT America because, while based in Houston, this office will provide us the opportunity to hire the best experts in West Africa petroleum systems, and, for sure, will allow HRT to bring the Namibia projects to a drillready stage on 2012 and with the technical standards that our Organization requires”, said HRT CEO, Dr. Marcio R. Mello.
HRT America Inc. will be run by Dr. Wagner E. Peres, as president, who has extensive experience in technical matters and management of projects in the South Atlantic sedimentary basins and Gulf of Mexico. Having over 30 years of experience, Dr. Peres worked for Petrobras and Devon Energy. He was the proponent of the wells that discovered the Marlim Field Complex in the Campos Basin during Petrobras venture towards the exploration of the Brazilian deep-water in the 80’s, and the manager of the team that discovered recently significant oil reserves in the pre-salt of Campos Basin for Devon Energy.


“I am very excited about the opportunity that HRT has given me. I am sure that we will not only build an excellent team of petroleum geoscientists and engineers, but we also deliver the best results in our Africa projects, matching or surpassing HRT’s and shareholder’s expectations”, said Dr. Wagner Peres.

Technip awarded refining contract in Brazil

Date: 04/20/2011 10:20
Technip, in consortium with Tomé Engenharia, was awarded by Petrobras a lump sum turnkey engineering, procurement and construction (EPC) contract, for five new units at the Presidente Bernardes Refinery in Cubatão, state of São Paulo (Brazil).

This contract covers engineering, procurement, construction, commissioning, pre-operation and assisted operation of five new process units, including a diesel hydrotreater and a hydrogen plant, as well as all associated utilities.

The project, which is scheduled to be completed by the end of 2013, will allow the production of low-sulphur content diesel to comply with new Brazilian environmental regulations.

Technip's operating center in Rio de Janeiro, Brazil will be in charge of engineering and procurement activities, while Tomé Engenharia will be responsible for all construction activities. The project will reach a 75% Brazilian content.

This contract marks a new step in the longstanding collaboration between the Group and Petrobras in Brazil, where Technip is already participating in several major Offshore projects, and owns strategic resources in the Subsea segment, including a flexible pipe manufacturing plant and marine assets.

Brazil tax revenue jumps nearly 10 pct in March

* Consumer spending, manufacturing help buoy revenues



* Brazil economy to cool in 2011 after break-neck 2010



BRASILIA, April 19 (Reuters) - Brazil's tax collection surged in March on the back of consumer demand that has continued to be robust, the federal tax authority said on Tuesday.



Tax revenue in March, adjusted for inflation, jumped to 71 billion reais ($44.9 billion), an increase of 9.7 percent from a year earlier.



Tax revenue in February totaled 64.14 billion reais.



Latin America's largest economy is expected to slow to growth of around 4.5 percent this year after red-hot expansion of 7.5 percent in 2010.



Still, a rise in aggregate wages, strong retail sales and industrial output compared to the previous year helped drive March tax income, the tax authority said.



Brazil's public accounts deteriorated significantly in 2010 as the government increased spending ahead of October's presidential elections.



The country missed its main budget target with a consolidated primary surplus BRPSPS=ECI in the 12 months through December of 2.78 percent of gross domestic product, well below the goal of 3.1 percent of GDP for the year. For more see [ID:nN31206720].



The March primary budget surplus figure is due to be announced on April 29.



Investors look at the primary budget surplus, the excess in revenue over expenses but excluding interest payments, as a gauge of the country's ability to service its debt.



The administration of the new president, Dilma Rousseff, announced budget cuts this month of 50 billion reais in an effort to meet its budget target and help contain rising consumer prices. [ID:nN09134882]



The tax authority expects an increase of 9 percent in tax revenue for 2011, not adjusted for inflation.



($1=1.582)

Brazil's MMX Gains Approval To Make Offer For PortX Shares

RIO DE JANEIRO -(Dow Jones)- Brazilian iron ore miner MMX Mineracao e Metalicos SA (MMXM3.BR) said Monday it has permission from Brazil's securities commission CVM to make a public exchange offer for shares of PortX Operacoes Portuarias SA (PRTX3.BR), a sister company with the EBX Group controlled by Brazilian billionaire Eike Batista.



MMX will publish within 10 days a prospectus with details of its planned offer for PortX, the operating company of iron ore export port Superporto Sudeste, which is currently under construction in Rio de Janeiro state, MMX said in a statement.



PortX's existing shareholders, which include Batista, will receive a total of $1.8 billion in royalties-based payments, in addition to around $440 million that will be payable in cash or in MMX shares, under the terms of the offer, MMX said. PortX shareholders will have 30 days in which to agree to the offer.



MMX plans to acquire Sudeste port in order to create a fully integrated system of mines and ports. Last September, South Korea's SK Networks Co (001740.SE) acquired 85.49 million new ordinary shares in MMX for 1.19 billion Brazilian reais. SK will own 11% of Sudeste port as part of its accord with MMX, the company reported at the time. MMX will supply SK with iron ore under a long-term contract as part of the accord between the two companies, MMX said.



Deepwater Sudeste port will initially have the capacity to ship 50 million metric tons a year of iron ore when it starts operations in 2012 in a $1.8 billion investment. It may eventually be expanded to a capacity of 100 million tons a year, to ship iron ore produced both by MMX and other mining companies in the region, MMX Chief Executive Officer Roger Downey said recently.

Brazil March jobless rate 6.5 pct, below forecast

SAO PAULO, April 19 (Reuters) - Joblessness in Brazil rose less than expected in March from February, underscoring the tight labor market that economists worry could pressure inflation and force the central bank to raise interest rates.

Brazil's jobless rate BRUNR=ECI edged up to 6.5 percent in March from a previously reported 6.4 percent in February, the government's statistics agency IBGE said on Tuesday.

The unemployment rate had been expected to rise to 6.7 percent, according to the median forecast of 12 economists surveyed by Reuters. Estimates ranged from 6.6 to 7.0 percent.


Last year Brazil's unemployment rate notched a series of record lows. The tight market helped boost salaries, as employers especially sought workers with higher levels of education and technical skills.

"There's a real lack of capable workers with degrees," said Rejane Endres, manager of the King55 clothing boutique in Sao Paulo. The store's line is heavy on design and global style, drawing demanding clients, Endres said.

With 12-month inflation at 6.3 percent through March -- near the top of a government range of 4.5 percent plus or minus 2 percentage points -- the labor market has worried some economists, who see little slack in the economy.



On Monday, Finance Minister Guido Mantega said the country was near full employment, posing a challenge for policy-makers. For more see Project Info : Khen Group


Last month, the number of Brazilians with jobs in the six major metropolitan areas surveyed edged up 0.4 percent to 22.279 million people and rose 2.44 percent from 12 months earlier period, the IBGE said.
The tally of people who unsuccessfully looked for work rose 1.99 percent in March from February to 1.538 million. The figure tumbled 14 percent from a year earlier, however.
Real wages, or salaries discounted for inflation, advanced 0.5 percent month-on-month to 1,557 reais ($980), and rose 3.8 percent from the year-earlier month.

OGX Upgrades its Portfolio of Potential Resources from 6.8 to 10.8 Billion Boe

OGX Petróleo e Gás, today disclosed the results of the reports prepared by petroleum consultants DeGolyer & MacNaughton (“D&M”), which estimate new volume of resources held by the Company in Brazil’s Campos and Parnaiba basins and three basins in Colombia. These reports indicate net potential resources for OGX of 5.7 billion barrels of oil equivalent (“boe”) in the Campos Basin, 1.0 billion boe in the Parnaíba Basin and 1.1 billion boe in Colombia. When combined with the estimates from the previous report for the Santos, Espírito Santo and Pará‐Maranhão Basins (Sep/09), these new results present a total volume of net potential resources of 10.8 billion boe.



“These results, presented by an independent, internationally‐renowned consulting group, confirm the extraordinary success of our business strategy and execution, which has been to focus on world‐class assets located mostly in shallow waters. We have discovered accumulations of scale and levels of productivity comparable to those found in the pre‐salt areas, and will be able to develop them at a much lower cost, utilizing fully tried‐and‐tested technologies”, commented Eike Batista, Chairman and CEO of OGX.



“OGX has demonstrated that it has the technical and managerial expertise to discover billions of barrels in accumulations in basins which vary greatly in their geological formations, and to transform their prospective resources into contingent resources. At the same time, we have expanded our exploration portfolio with high potential assets. We have also made huge strides in the delineation of new discoveries and production, while continuing to grow and create value for all stakeholders", emphasized Paulo Mendonça, General Executive Officer and Head of Exploration for OGX.



The five reports submitted by D&M were prepared with the information available as of December 31, 2010, for the Campos and Parnaíba Basins, and as of March 31, 2011 for Colombia. The documents cover a period of approximately 15 months of exploration and 22 wells, and do not include the wells drilled subsequently. For the Campos Basin, only the post salt sections were considered. The new reports update the figures that were previously available for these two basins and present the first estimates for the five blocks held by OGX in Colombia. D&M’s potential resource report dated September 2009 continues to apply for the Santos, Espírito Santo and Pará Maranhão basins.



The results of these studies reflect the success of OGX’s strategy to prioritize, in the initial phase of its campaign, the accomplishment of ANP work program and the exploratory drilling of wildcat wells to maximize the discovery of accumulations. In response to the large number of discoveries made, the Company is intensifying its appraisal campaign in preparation for Declarations of Commerciality and the start‐up of production.



“The identification of our discoveries and the recent chartering of five FPSOs and two WHPs with OSX, which will be followed by new orders, represent an important step towards production. We have rapidly executed on our business plan and achieved important milestones, enabling us to the begin production and commercialization within a timeframe that is unprecedented for the oil and gas industry”, stated the Production Officer, Reinaldo Belotti.

Brazilian oil fuels debate on U.S. policy

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RIO DE JANEIRO

In 2007, former President George W. Bush punctuated a trip to Brazil with a visit to a biofuels plant, highlighting the country’s new energy independence and expanding ethanol market as a model for the U.S. to kick its addiction to oil.

Four years later, though, Brazil has made major oil discoveries and drilling advocates say the Latin American nation should be a model for more drilling in the U.S. at a time when oil costs have surged beyond $100 a barrel.

Government officials here have said the Libra oil field, about 140 miles off the coast of Rio de Janeiro, could hold reserves of as much as 15 billion barrels of oil — an estimate that, if true, would more than double Brazil’s oil reserves of 14 billion barrels and make it the most significant oil discovery in Latin America in more than 30 years.

Together, Libra and other recent oil finds could eclipse 123 billion barrels, according to some researchers, and catapult Brazil from the world’s 15th-largest oil producer to a member of the coveted top 10.

Brazil’s ascent as a major oil power clearly underscores the importance of deepening U.S. ties with Latin America’s biggest economy — something President Obama tried to accomplish with his two-day visit — but advocates say it also shows what might be possible if the U.S. had a more aggressive drilling policy.

“I would argue there is a lesson here for the United States,” said Dan Kish, senior vice president of policy at the Institute for Energy Research, an industry-backed think tank. “The president loves to talk about us only having 2 percent of the world’s supply [of oil] but, well, if you’re never going to look, you’re never going to find it.”

Brazil has been an energy self-sufficient country for several years now, exporting more than it imports. That means most of the oil discoveries, which have been made deep beneath a layer of salt in the Campos and Santos Basins, likely will be sold overseas.

That Brazil is now awash in oil is somewhat ironic given the fact that the military dictatorship in charge in 1975 instituted an ambitious ethanol program out of fear that the country was too dependent on foreign oil, doling out subsidies to sugar-cane farmers and requiring gas stations to install ethanol pumps. Decades later, 40 percent of the nation’s fuel supply comes from ethanol.

As a result, ethanol has the status of a veritable miracle drug. Foreign leaders, especially from the U.S. — which ranks just ahead of Brazil as the world’s top ethanol producer — hold it up as an energy solution they would like to emulate back home.
During his 2007 visit, Mr. Bush struck an agreement with Brazilian President Luiz Inacio Lula da Silva to expand ethanol production and use in Latin America and the Caribbean. Mr. Bush noted that “good ethanol policy and good alternative fuel policy actually leads to more jobs.”

Of course, there are key differences between Brazil, which has laid the groundwork for an ethanol distribution network and uses its abundant sugar-cane crop to produce ethanol, and the U.S., which relies on corn. Corn isn’t as efficiently processed into alcohol, requiring extra steps during production, and some critics warn that ethanol demand could cause a spike in food prices.

U.S. ethanol industry advocates dismiss the fears of food manipulation, pointing that the fuel uses only 3 percent of the world’s grain supply, and there’s a good deal of support among corn-belt lawmakers seeking to boost ethanol, which now accounts for 10 percent of the nation’s fuel supply, according to the Renewable Fuels Association.

“At a time when you’re looking at $104 for a barrel of oil, you ought to maximize the amount of ethanol being used to lower cost if at all possible,” said RFA President Bob Dinneen.

But ethanol advocates have clashed with skeptics, particularly conservatives, who oppose the Environmental Protection Agency’s efforts to raise federal standards of ethanol blends in gasoline from 10 percent to 15 percent.

Mr. Obama has made renewable energy a cornerstone of his energy policy, including a requirement that all new vehicles have flexible-fuel capability by the end of his first term. He also promised during the 2008 campaign that all cars purchased by the federal government would have flex-fuel capability, a pledge that the St. Petersburg Times’ Politifact website rates as “in the works.”

In Brazil, nine out of 10 new cars sold are flex-fuel vehicles capable of operating on 100 percent ethanol fuel as well as gasoline blends containing lower amounts, usually 20 percent or 25 percent ethanol.
Brazil itself would like to crack the U.S. ethanol market — a point President Dilma Rousseff made to Mr. Obama in their meetings.
“We seek more fairness and balanced trade relations. For us, it’s fundamental that we should break away from the barriers that have arisen against our products, like ethanol, beef, cotton, orange juice, airplanes, and so on and so forth,” she told reporters.

To protect domestic ethanol producers, the U.S. imposes a 54-cents-per-gallon tariff on imports of ethanol and provides a 45-cents-per-gallon tax credit for domestic ethanol blenders.

The sugar-cane ethanol industry in Brazil has called on the U.S. to remove the tariff and the subsidy, which cost the federal government about $6 billion a year.

“The fiscal situation in the U.S. recommends that the government stops spending public money it does not have to support and industry that does not need support,” said Paulo Sotero, director of the Wilson International Center’s Brazil Institute. “This new situation creates a natural expectation both here and in Brazil that the U.S. support to the corn ethanol has reached a limit and will have to be revised, if not eliminated.”

But in a sign that doing so wasn’t even on the table, Mr. Obama made no mention of the subsidy during his remarks Saturday after a bilateral meeting with Ms. Rousseff. Instead, he touted Brazil’s recent oil discoveries.

“With the new oil finds off Brazil, President Rousseff has said that Brazil wants to be a major supplier of new stable sources of energy, and I’ve told her that the United States wants to be a major customer, which would be a win-win for both our countries,” he said.

But that could mean the U.S. becomes more, not less, dependent on foreign oil. Back home, many members of Congress want to see domestic production boosted.

In the wake of last April’s catastrophic BP oil spill off the coast of Louisiana, his administration imposed a moratorium on deep-water drilling. The ban resulted in the loss of 12,000 jobs in the region, according to government estimates.

Although the moratorium was technically lifted in October, the Interior Department has approved just three new deep-water drilling permits. Mr. Obama has defended that pace, saying his government supports exploration but wants to ensure it’s done responsibly in the wake of the Gulf of Mexico spill, which ranks as the worst environmental disaster in the nation’s history.

Still, the slow process — described by critics as a “permatorium” — has led at least one rig, the Noble Clyde Boudreaux, to pack its bags and move to Brazil.

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Petrobras, Sinopec close deals for offshore blocks

Brazilian state-run oil company Petrobras (PETR4.SA) and China's Sinopec (0386.HK) have finalized a joint venture agreement to explore blocks off the coast of northern Brazil, a Sinopec official said on Wednesday.

Carlos Stenders, adjunct director of Sinopec's Brazil unit, told reporters on the sidelines of an industry conference that the agreements were signed during Brazilian President Dilma Rousseff's visit to China. He did not provide details on what the stake of each company would be in the blocks.

Last year, Petrobras signed a cooperation agreement with Sinopec for the possible joint development of the BM-PAMA-3 and BM-PAMA-3 blocks that Petrobras won in auctions in 2001 and 2004.

Brazil is seeking financing to tap oil thousands of meters below the ocean's surface, while cash-rich and energy-hungry China is scouring the globe for crude reserves

Nexans to install cables at Brazil's Comperj complex

Cable company Nexans has been awarded a multi-million turnkey contract by Toshiba Sistemas de Trasmissão e Distribuição do Brazil to supply and install high-voltage XLPE cables and accessories that will be used to interconnect the two main electrical substations at the new Comperj petrochemical complex currently under construction in the state of Rio de Janeiro, Brazil.

Petrobras is constructing the Comperj complex to help increase Brazil’s capacity to refine oil and reduce the number of petrochemical products it has to import.

It is expected to come on line in 2013 and will be capable of processing 165,000 barrels of heavy crude oil per day.

The two main substations at Comperj are separated by a distance of around 3.25km and the Nexans cables will provide a high-voltage interconnection with two circuits, including a total of 19.5km of 345kV XLPE-insulated cables with termination, premoulded joints, an earthing system and corresponding installation services.

Betting on Power in Brazil

RIO DE JANEIRO—Brazilian billionaire Eike Batista and other local investors are teaming up with IntercontinentalExchange /quotes/comstock/13*!ice/quotes/nls/ice (ICE 121.19, +0.71, +0.59%) Inc. to launch a trading exchange for electric power, saying the existing system for negotiating contracts is inefficient.

Uncontracted electric power in Brazil is currently sold under private contracts between producers and large consumers, which makes it hard or even impossible to determine a spot market price. The exchange aims to bring those negotiations under one roof, and make the pricing public, which would also allow for derivatives such as futures contracts to be developed down the line.

The move is the second this year by a U.S. exchange company looking for expansion in Brazil, with BATS Global Markets already seeking to launch a new stock trading platform.

ICE is also pushing ahead with organic initiatives as the energy-focused company pursues the derivatives arm of NYSE Euronext /quotes/comstock/13*!nyx/quotes/nls/nyx (NYX 38.58, +0.32, +0.84%) through an unsolicited $11.3 billion break-up plan in partnership with Nasdaq OMX Group /quotes/comstock/15*!ndaq/quotes/nls/ndaq (NDAQ 27.75, -0.01, -0.04%) .

The new energy trading platform, to be called BRIX, aims to triple trading of contracts in Brazil's "free energy" market over the next three to five years to about 75 billion Brazilian reais ($47.3 billion), up from an estimated 25 billion reais in 2010, the investors said in a news release to announce the deal.

"I'm an efficiency warrior," Mr. Batista told reporters in Rio de Janeiro. "I'm seeking to bring efficiency to the sector. This is the Facebook of the Brazilian electrical sector."

BRIX expects to serve the more than 1,400 companies allowed to trade in the free market, where consumers can negotiate directly with suppliers to purchase any amount of energy. This market accounts for 25% of the country's energy consumption, according to BRIX.

BRIX "will help form prices in a transparent way, and through that it will enable the launch of derivative products," said Paulo Pedrosa , president of Abrace, the country's association of large industrial energy consumers.

The new exchange will provide an additional measure of security for electric power investors, said Mr. Pedrosa, whose group had been in talks with BRIX.

During its first phase, to begin in June, the BRIX platform will provide daily pricing via a spot index, and contracts would still be registered with the country's electric-power commercialization chamber, or CCEE.

In the second phase, for which executives didn't give a timeframe for launch, futures would be traded in which electricity would be bought for delivery in three months, six months, or annual contracts.

The platform may be extended to other countries in Latin America, BRIX Chief Executive Marcelo Mello said in Rio de Janeiro.

Moreover, BRIX may also move into contracts for oil, ethanol, biodiesel and "any other kind of energy," Mr. Batista told reporters.

Mr. Batista, who made his fortune in mining but has moved aggressively into the energy sector in recent years, said he hopes to eventually sell oil produced by his OGX Petroleo & Gas Participacoes on the exchange, where he expects to get better prices.

The company may partner with BM&FBovespa, Latin America's biggest exchange, or Brazil clearinghouse Cetip SA - Balcão Organizado de Ativos & Derivativos to provide clearinghouse services, or BRIX may set up its own clearinghouse, using ICE's experience, said Roberto Teixeira da Costa , a BRIX partner and former president of Brazil's securities regulator CVM.

BM&FBovespa has a partnership with the CME Group /quotes/comstock/15*!cme/quotes/nls/cme (CME 304.63, +2.96, +0.98%) , in which each holds a stake in the other company. The CME provides electricity futures contracts in the U.S. The agreement between the CME and BM&FBovespa didn't mention plans to bring electricity trading to Brazil, though it allows the São Paulo exchange to negotiate all CME contracts.

According to Mr. Costa, a possible partnership in the clearinghouse business with the BM&FBovespa exchange poses no conflict with the bourse's partnership with CME.

Emerging Powers Harnessing Neighbours' Hydroelectricity

Credit:Agência Brasil

Emerging countries like Brazil and China are building numerous hydroelectric dams at home and abroad to help drive their economic growth. But while in Latin America the phenomenon is touted as an integration process, in Asia it has generated tension over the shared use of rivers.

Brazil, the leader of this strategy in Latin America, has an agreement to build five hydropower dams in Peru, and is interested in building two similar plants, which would depend on reaching agreements with Bolivia: a joint venture between the two countries on the stretch of the Madeira river that forms part of the border between them, and a Bolivian plant.

A large part of the energy generated by these projects will be exported to Brazil, whose government projects an annual 5.9 percent increase in demand for energy from now to 2019, when the country will need 167,000 MW, over two-thirds of which will come from hydroelectricity.

Building dams outside of the country is one way to evade stiff opposition from environmentalists and indigenous groups in the Brazilian Amazon, where nearly all of the country's as-yet untapped hydropower potential is found.
Cachuela Esperanza on the Beni river in northern Bolivia, near the Brazilian border, will have a potential of 990 MW, according to a project drawn up by Tecsult, a leading Canadian consulting firm. That is nearly the equivalent of Bolivia's entire demand for energy.

"It will only be profitable if more than 90 percent of the energy generated is exported," Walter Justiniano, an engineer from the city of Guayaramerín, on Bolivia's northern border with Brazil, told IPS.

Distributing the energy within Bolivia would require the installation of hundreds of kilometres of power lines, since the nearest city is 1,000 kilometres away, he said.

The proposed dam on the Ribeirão rapids on the Madeira river, the biggest tributary of the Amazon by volume as well as length, would have a capacity of 3,000 MW - similar to the Itaipú dam, one of the world's largest hydroelectric facilities, built 27 years ago by Brazil on the border with Paraguay.

Paraguay has never been able to consume more than 10 percent of the energy produced by Itaipú, although it is entitled to half.

The two projects are still in the feasibility study phase, according to Alberto Tejada, manager of electricity generation at Bolivia's state power company Empresa Nacional de Electricidad (ENDE).
The Cachuela Esperanza project depends on the evaluation of "technical questions and policies of sovereignty, security and environmental protection," Tejada told IPS. "Negotiations and arrangements for its financing and construction are not far along," he admitted, although Bolivian President Evo Morales expressed his interest in pushing the project forward in January.

The Ribeirão rapids project, meanwhile, depends on an agreement between Bolivia and Brazil "as a guarantee of enforcement of the treaties for the free navigation of international rivers," Tejada said.

A Bolivian team of experts is studying the hydroelectric potential of three rivers in the basin shared with Brazil, which will serve as a basis for the negotiations, he added.

The rivers to be dammed, in both Bolivia and Peru, are tributaries of Brazil's major Amazon rivers, like the Madeira and the Solimões.

The black hole of Asia
The situation is much more complex in Asia, where the Tibetan plateau in China is the source of some of the world's largest rivers, which flow towards India and Southeast Asia.

Growing demand in China is driving up energy consumption much faster than in Brazil, because of the Asian giant's population of 1.3 billion and economic growth of around 10 percent a year.

But the recent spate of dam-building by China is worrying others downriver with dams and water needs of their own. There are approximately 81 large Chinese hydropower projects on the upper Yangtze, Mekong and Salween rivers.

Cambodia, Laos, Thailand and Vietnam established the Mekong River Commission (MRC) in 1995, to cooperate on sustainable management of the river.

China's 21 dams on the upper Mekong are causing concern in the four MRC countries, where a drought in the summer of 2009 reduced the Mekong’s flow drastically enough to make the MRC suspect China of hoarding the river's waters, causing scarcity downriver.

But the MRC's weak resistance to Chinese pressure has been harshly criticised by organisations like the International Rivers Network (IRN).

In addition, Laos announced in March that it would build the Xayaburi hydroelectric dam with a capacity to generate 1,260 MW, triggering protests in Vietnam, which fears serious damages to agriculture and fish farming in the Mekong delta.
But Xayaburi is just the first of 11 hydropower plant projects on the Mekong river that the governments of Cambodia, Thailand and Laos are considering, nine of them in Laos alone.

India's concerns over Chinese dams on the Yarlung Tsangpo (the upper reaches of India's Brahmaputra river) echo similar worries over dams being built in Nepal and Bhutan, where India in its turn is leveraging its weight to access cheap electricity.

The larger countries in the region are thus using their economic clout to harness the resources of smaller countries.

In Burma, dams being built by China, Thailand, India and Bangladesh offer these countries an opportunity to access cheap electricity while not being held responsible for the negative social, economic and environmental impacts. Strong anti-dam movements in Thailand, for example, make projects in Burma particularly attractive.

There are 29 hydropower projects in Burma with a total combined capacity of 19,413 MW currently under construction and another 14, with a capacity of 13.971 MW, in the planning stages. Ninety percent of all power to be harnessed is for export.

Chinese firms are the biggest dam builders in the area, one more example of how "China is emerging as a massive economic investor in the region," Carl Middleton of IRN’s Mekong campaign told IPS.



Brazil, similar role, smaller scale

Brazil plays a similar role but on a smaller scale in Latin America, where companies like Odebrecht, Andrade Gutierrez, Camargo Corrêa and Queiroz Galvão are involved in the largest dam-building projects.

But Brazil seeks to exercise a more subtle kind of power than China, whose companies tend to bring in Chinese workers for projects abroad, which limits the hiring and training of local labour power.

Nearly all of the countries of South America have an energy surplus, untapped potential and sources like oil, hydroelectricity, natural gas or coal. But "some states have natural resources, while they lack capital or technology" to develop them, said Daniel Falcón, a diplomat in the Brazilian foreign ministry's division of non-renewable energy resources.

These conditions justify the push for "energy integration," which besides offering "complementarity," foments "understanding and mutual familiarity among neighbours," he told IPS.

That is one of the top priority issues taken up by the Union of South American Nations (UNASUR) since 2007. The regional bloc now has guidelines and an action plan, and is negotiating an energy treaty. "There are no initiatives like this anywhere else in the world, not even in the European Union," Falcón said.

The Cachuela Esperanza dam will represent additional revenue for the Bolivian state, more energy for productive activities, and improved living conditions in the country's northern Amazon jungle region, while reducing the use of fossil fuels to generate electricity, leading to a cut in greenhouse gas emissions, Tejada argued.

But it will also require a dam "almost as big as Itaipú," which will flood rainforest in Bolivia, said Justiniano, the engineer from Guayaramerín. He concurs with other critics of the construction of "Brazilian" hydropower plants in Bolivia and Peru, who consider them unnecessary and destructive of the countries' rich biodiversity.

Petrobras will use gas from the pre-salt in the new petrochemical complex

Source: Agência Brasil

Petrobras (Bovespa: PETR3/PETR4, NYSE: PBR / PBRA, Latibex: XPBR / XPBRA, BCBA: APBR / APBRA) will use natural gas from the pre-salt fields as fuel and feedstock in the new petrochemical complex in Rio de Janeiro (Comperj), which is being builtin in Itaboraí, the metropolitan region of Rio. According to Petrobras' Downstream Director, Paulo Roberto Costa, the gas will be taken, probably by sub-sea pipelines, to Comperj, which will have 250 to 300 kilometers (km) long.


The route of the pipeline is still being studied. Another possibility to bring the gas to Comperj is the use of gas vessels to liquefy natural gas in the sea and transport it to a regasification terminal on land.

According to Costa, is expected to use 15 million cubic meters of natural gas daily from pre-salt as a feedstock in Comperj petrochemical plant, where will be transformed into products such as propylene, butadiene,benzene, polyethylene and polypropylene. The remaining gas will be used as fuel in the Petrochemical Complex, whichwill also include two refineries.

The expectation is that the first refinery goes into operation in late 2013. The petrochemical plant should start operating between late 2016 and early 2017 and will be attended by Braskem (SAO: BRKM5, NYSE: BAK, SAO: BRKM6 - BRMKM3, Pink: BAKBF, FRA: BRDA, ETR: BRDA, FRA: BRD, ETR: BRD), in which Petrobras is a shareholder. A second refinery should only come intooperation in 2018.

Each refinery will have capacity to process 165,000 barrels of oil per day, when operating at full capacity, transforming crude oil into products like diesel and jet fuel.

CIG's New Gas Pipeline Project

CIG | ELP Print Share Companhia Energetica de Minas Gerais (CIG - Analyst Report), also known as CEMIG, recently announced that the company will participate in a project to construct a gas pipeline connecting São Paulo and Uberaba. Primarily the pipleine will serve the Ammonia Plant, which will be built by Petroleo Brasileiro SA, or Petrobras (PBR - Analyst Report) by 2013.

The company has signed a protocol of intentions with Petrobras and the Government of the State of Minas Gerais in order to participate in the development of technical and feasilbility studies. The company will also help in the implantation of the gas pipeline.

CEMIG is one of the largest integrated electric utilities in Brazil, having more than 6,896 megawatts of installed generation capacity and deriving approximately 97% from hydroelectric power.

The company is engaged in natural gas distribution through its subsidiary, Gasmig. The natural gas distribution arm serves Metropolitan Belo Horizonte, Barbacena, Juiz de Fora, the Steel Valley and the South of Minas.

The company is evidently well placed to benefit from the increasing electricity demand in Brazil. Electricity sold in the fiscal year 2010 improved 9.0% year over year to 66,255 GWh versus 60,909 GWh in the year-ago period due to higher demand in all consumer categories.

Rising operating expenses, on the other hand, hav been a problem for the company. In the fiscal year 2010, operating expenses jumped 8% year over year due to rise in expenses related to purchased energy, operating provisions, contract services, employee participations, material, gas purchased for resale, cost from operation, and other expenses.

The company is in stiff competition with its peers like Companhia Paranaense de Energia (ELP - Analyst Report), EDP-Energias de Portugal, S.A. and Eletropaulo Metropolitana Eletricidade de São Paulo SA

Brazil's OGX To Produce 60,000 BOE/Day In 2012 - Batista

SAO PAULO -(Dow Jones)- OGX Petroleo & Gas Participacoes (OGXPY, OGXP3.BR), the oil producer controlled by Brazilian billionaire Eike Batista, expects to produce 60,000 barrels of oil equivalent a day next year, Batista said Tuesday.

OGX will begin production in September from its offshore oil fields, Batista said in Rio de Janeiro. Production will ramp up to 1.4 million barrels a day in 2020, Batista said. He was in Rio announcing the launch of the BRIX exchange, a platform for trading electricity that will eventually expand to trading oil and other forms of energy.

OGX is expected to announce new reserve estimates on Friday. The report is being completed by DeGolyer and MacNaughton.

The company said last month that it expects to produce its first oil from the Waimea prospect in the third quarter. All the production equipment has been purchased, and an extended-well test has been approved by local regulators, the company said on March 28 after reporting quarterly earnings.

The well is expected to initially produce about 20,000 barrels of oil per day, although testing showed a capacity of at least 40,000 barrels a day, OGX said.

Hu Jintao Holds Talks with Brazilian President Rousseff

On the afternoon of April 12, 2011, President Hu Jintao held wide-ranging and fruitful talks in an in-depth, friendly manner with Brazilian President Dilma Rousseff at the Great Hall of the People. Both sides reached broad consensus on a series of major issues including furthering bilateral ties.

Hu said since the establishment of strategic partnership in 1993, especially in the new century, China-Brazil relations have entered a new stage of comprehensive, rapid and in-depth development, with close high-level exchanges, improving dialogue and cooperation mechanism and deepening political mutual trust. Both sides have reached one new high after another in the bilateral trade and made positive progress in relevant major cooperation projects and pragmatic cooperation in all areas. The two countries have also kept sound coordination and cooperation in global issues. "China-Brazil strategic partnership has become an example for South-South cooperation and has greater global influence and strategic significance," said Hu.

Rousseff said Brazil attaches great importance to developing relations with China and Brazil-China strategic partnership is of great significance. To establish and develop strategic partnership with China is a strategic choice of Brazil. In recent years, bilateral ties have entered a new stage of development and the friendship between both peoples has been increasing with fruitful and closer cooperation in all areas. Both sides have kept close high-level contacts, seen a strong growth in economic and trade cooperation and enhanced coordination and cooperation in multilateral organizations and international affairs. Brazil-China cooperation has contributed to the development of South-South cooperation.

Hu said currently both China and Brazil are at an important stage of development and face similar opportunities and challenges. China is ready to work with Brazil to further deepen and develop bilateral ties mainly in the following four aspects in a bid to contribute to economic growth and improvement of people's livelihood in their respective countries. First, adhere to equal consultations and deepen strategic mutual trust. Hu urged both sides to maintain exchanges at high and other levels, give full play to the role of China-Brazil High-Level Committee, strategic dialogue and other dialogue mechanisms. The government agencies, legislative bodies, political parties and localities of the two countries should expand exchanges and cooperation. Second, adhere to mutual benefit and uplift the level of cooperation. Hu called on the two countries to further implement their Joint Action Plan, maintain sound and steady trade growth and promote cooperation on economy, trade, investment, energy, mining, infrastructure construction and finance. Third, adhere to mutual complementarities of advantages and expand cooperation on science and technology. Hu called for stronger cooperation in areas like agriculture, new energy, biotechnology, nano technology, information technology and space technology. Fourth, adhere to mutual exchange and consolidate the social basis. Hu suggested both sides expand exchanges and cooperation on culture, education, public health, social security and poverty alleviation and increase friendly contacts between the press, academic and sports circles as well as the youth of the two countries to make China-Brazil friendship more deeply rooted in the hearts of both peoples.

Rousseff fully agreed with President Hu's important proposals on furthering bilateral ties, saying Brazil is ready to keep closer bilateral strategic partnership, make their partnership assume increasing strategic significance, tap the role of Brazil-China high-level committee and promote exchanges and cooperation in such areas as trade, investment, finance, technology, agriculture, infrastructure, mining and culture so that "Brazil-China ties could see a qualitative leap".

China and Brazil have extensive common interests on major international and regional issues and shoulder increasingly more common responsibility, said Hu. Hu said that China would enhance strategic coordination with Brazil in international affairs and better deal with global challenges like climate change and sustainable development in a bid to push forward the world political and economic order in the direction of benefiting the developing countries.

Rousseff said her country would like to see more coordination with China on such issues as trade, finance and environmental protection as well as within the framework of such multilateral organizations like the United Nations and the G20. She said the two countries should make joint efforts with other developing countries to make contribution to promoting multilateralism and sustainable development, safeguarding world peace and establishing a just and equal world order.

Following the talks, the two heads of state signed a joint communiqué between the two countries and attended a signing ceremony of bilateral cooperation documents.

Prior to the talks, President Hu hosted a welcome ceremony for President Rousseff's visit at the North Hall of the Great Hall of the People. Vice Chairman of the Standing Committee of China's National People's Congress (NPC) Chen Changzhi, State Councilor Dai Bingguo, Vice Chairman of the National Committee of the CPPCC Li Jinhua, Vice Chairman of Central Committee of China Zhi Gong Party Wang Qinmin, Foreign Minister Yang Jiechi, Chairman of the National Development and Reform Commission Zhang Ping, Minister of Industry and Information Technology Miao Wei, Minister of Commerce Chen Deming and Chinese Ambassador to Brazil Qiu Xiaoqi attended the welcome ceremony.

Brazilian President to Visit China on a Trade Mission .

SAO PAULO—When Chinese President Hu Jintao welcomes his Brazilian counterpart Dilma Rousseff for a state visit to Beijing this week, Ms. Rousseff is expected to hail soaring commercial ties between two of the world's biggest and fastest-growing economies.

But in addition to the praise, Ms. Rousseff is also expected to vent the growing frustration that Brazil, like other developing nations, feels about the nature of its commercial relationship with China. While countries like Brazil sell loads of raw materials for China's voracious economy, China also floods countries like Brazil with cheap imports and restricts access to its own economy for other kinds of products like manufactured goods.

Ms. Rousseff arrives in China for an official state welcome Monday ahead of bilateral meetings Tuesday and Wednesday. On Thursday, the two will be joined by leaders of Russia, India, and South Africa for a meeting of the so-called BRICS group of emerging countries.

"We need a more sophisticated relationship with the Chinese," said Sergio Amaral, a former Brazilian trade minister who now heads the Brazil-China Business Council, a Rio de Janeiro-based group that fosters ties between the two countries. "The relationship can't just be about commodities."

It is true that China's hunger for iron ore, oil, soybeans and other commodities is fueling the export growth responsible for much of Brazil's economic boom. Trade between the two ballooned to more than $56 billion in 2010, compared with just over $3 billion a decade ago. In the process, China leapfrogged the U.S. as Brazil's leading trade partner, just as it has done with other Latin American countries and other emerging markets world-wide.

But as the ties have deepened, many in Brazil see a pressing need for a more equitable relationship. In a briefing with reporters this week, a Brazilian government spokesman said Ms. Rousseff's trip to China is about "reciprocity" between the two countries in terms of trade and investments in each other's economy. For instance, 84% of Brazilian exports to China are commodities, while 98% of Chinese sales to Brazil are manufactured goods, according to the Brazilian government.

Among other agreements likely to come from their meetings, Ms. Rousseff is expected to seal deals that could save a struggling Brazilian aircraft factory in China and possibly grant Brazilian pig farmers long-sought access to China's massive meat markets. Seeking to drum up new business, nearly 250 Brazilian executives will follow Ms. Rousseff on the visit, her first beyond Latin America since she took office Jan. 1.

One item high on Brazil's agenda is China's currency policy and its effect on trade between the two countries. Echoing complaints by the U.S. and other major exporters, Ms. Rousseff has grown increasingly vocal against Beijing's intervention in currency markets. The intervention keeps Chinese exports cheap in global markets and undermines the competitiveness of Brazilian products at home against Chinese imports—especially at a time when Brazil's own currency has soared because of the boom.

In addition, Ms. Rousseff is expected to urge Mr. Hu to open Chinese markets to a broader range of Brazilian goods. Whereas cheap Chinese imports flood Brazil and other emerging markets, China maintains tough barriers for some imports. The imbalance has led to growing complaints from industry groups in other fast-growing markets including South Africa, India, and Indonesia.

Even when China gives ground, it concedes very little. Consider the aircraft factory established in 2002 by Empresa Brasileira de Aeronautica SA, or Embraer.

When high fuel prices in subsequent years made the regional jets produced at the factory less marketable, China forbade Embraer from shifting production to another type of commercial aircraft because it would compete against planes being developed by Chinese manufacturers. As a result, production has been sluggish and Embraer has threatened to close it once a final aircraft under assembly is completed later this month.

People familiar with the talks say the two governments have reached an agreement, to be unveiled this week, that will allow Embraer to begin building executive jets at the plant. Even so, the experience is often cited as an example of the difficulties Brazil has selling anything other than raw materials to China.

A third big issue between the two countries is China's role as a foreign investor. After a high-profile visit by Mr. Hu to Brazil in 2004, during which a raft of bilateral trade deals and planned investments were announced, Brazil had high hopes for Chinese ventures within its borders.

But some of what China promised hasn't materialized, including a multibillion dollar steel plant that Baosteel Group, China's largest steel maker, said it would build in northeastern Brazil. And though China has gradually become a bigger investor in Brazil, most of its transactions have focused on food, fuel, minerals and other raw materials.

"The Chinese have invested opportunistically," said Luiz Felipe Lampreia, a former Brazilian foreign minister. "They're not as interested in developing businesses in other markets as they are in getting what they need for their own growth."

However, the Chinese have invested in the oil sector, which, given Brazil's pending development of massive new offshore oil beds, has been especially attractive for them. For instance, Sinopec Group last year paid $7.1 billion for a stake in the Brazilian operations of Spanish oil company Repsol YPF SA. Early last year, Sinopec also helped Petroleo Brasileiro SA, Brazil's state-run energy giant, build a 1,450-limometer natural-gas pipeline. And in 2009, Petrobras secured a $10 billion loan from the China Development Bank, to be repaid with oil, to finance development of the offshore beds.

Keppel FELS secures US$180 m rig deal

Keppel FELS, a unit of Keppel Corporation, has secured another rig building contract worth US$180 million from SGX-listed Jasper Investments. Keppel said that Jasper has exercised its option with Keppel FELS to build a second KFELS B class jackup rig for delivery in the first half of 2013.The option was given to Jasper when it ordered its first jackup from Keppel Fels on December last year.

Keppel FELS managing director Mr Wong Kok Seng, said that "including this latest contract from Jasper, we have secured 17 jackup rigs since November last year. Of these, 14 are proprietary Keppel designs. These include 10 KFELS B and Super B Class rigs".

Similar to its first jackup rig, Jasper's latest unit will be able to operate in water depths of 400 feet, drill 30,000 feet deep and accommodate 150 men.

Launched today in Rio stock for energy contracts in Brazil

It was released on Tuesday (12), the company BRIX, which is an electronic trading platform for electricity in Brazil. The platform, which began operating in June, aims to become the first business exchange of electric power in Brazil. The prospect of the initiative is to triple the turnover in the sector over the next three to five years, a jump of $ 25 billion estimated in 2010 to $ 75 billion.

The initiative will meet more than 1,400 agents working on the open market and represent nearly 25% of energy consumed in the country. The platform provides a number of innovations, among them the creation of an index to measure the value of purchase and sale of electricity, the BRIX Spot, which will measure changes in prices from trading effect.

According to members of the Brix, the stock comes to power purchase and sale of electricity in the country.
According to Marcelo Mello, who assumes the presidency of the company, the new trading model of BRIX, the process of energy trading contracts will reduce time and costs. "The communication of the electronic platform of BRIX is faster, transparent, efficient and direct. The current process, which is done by phone and takes a week to ten days to complete, can now be done in seconds with clicks. It is a huge reduction in time and cost, "he said. Mello even joked saying:" The current commercial process has low energy efficiency. "

According to the executive, the same way as in the current market, players who can participate are the agents of CCEE (Chamber of Electric Energy Commercialization). "The relationship is bilateral and in the same way that the regulations require all transactions contracted in CCEE will be recorded," says Mello.
Are partners of the firm: The entrepreneur Eike Batista and executives Josué Gomes da Silva, CEO of Coteminas, Marcelo Parodi, CEO of Compass Energy, economist Roberto Teixeira da Costa, the first president of Securities and Exchange Commission (CVM), and the company Intercontinental Exchange (ICE), the only person of company and global leader in electronic trading on various markets.

Asked about the possibility of operation of BRIX also in Latin America, Marcelo Mello dismissed the expansion of interest at first, but stressed that the ICE (Intercontinental Exchange) has expertise abroad and would probably act this way yes. "Today Brazil has little export ratio of energy, something with Paraguay, are expected to arrive in Chile and Peru. But I have the impression that our focus is the Brazilian market. We already have much work to do here," he said.



And the oil?

Although Marcelo Mello have pointed out that BRIX will operate exclusively focused on the electricity market have dropped and that the company will enter another market that is not the power, Mr. Batista said he will use his vote to enforce the sale of oil as well. "We have the platform, why not? OGX will produce more than one million barrels of oil soon," he said. Eike compared to Facebook's new bag technology in the electricity sector.

Also according to Eike, other forms of energy may also be negotiated, such as ethanol and coal. "After the crash of Japan, nuclear power tends to go downhill. Try indomitable master something is very complicated and the research centers of the world will review it," he said, making a "bet" with gifts on this future " decadence "of nuclear energy.

Eike estimated that the costs that will be generated with the demands that come from Fukushima will make "the bill becomes priceless." "The Germans are a highly technical people, it came out because I realized," he added.
The incumbent shall be 23.75% of the new exchange energy, alongside partners Josué Gomes da Silva, Marcelo Parodi and IntercontinentalExchange (ICE). Economist Roberto Teixeira da Costa will be 5%.
IPO

At the time, Marcelo Mello said the Brix may have traded on the Stock Exchange. He said so far invested $ 15 million, and there is an investment plan of over $ 10 million. "If there are more calls for investments will be made, and the extent to which markets are developing, there may be going public," he said.

The expectation of the CEO of ICE (Intercontinental Exchange), Jeffrey Sprecher, who is at least a thousand people are employed to work in the Brazilian platform. ICE, founded in 2000, operates in counter and futures markets in the energy, agricultural commodities, carbon emissions, currencies and credit derivatives. Operates three regulated futures exchanges (U.S., Europe and Canada), two OTC markets (energy and credit derivatives) and five clearing houses and settlement (clearing houses).

The United States and Latin America Flying down to Rio

Latin Americans like Barack Obama. They would like him even more if his rhetoric of partnership was matched by policy changes

IN APRIL 2009, shortly after becoming president of the United States, Barack Obama attended a 34-country Summit of the Americas in Trinidad where he charmed those present—even Venezuela’s Hugo Chávez—with a call for the often fractious relationship between the United States and its neighbours to become an “equal partnership”. Two years on Mr Obama remains wildly popular with ordinary Latin Americans. But as he sets off on March 19th for his first trip to South America, he will find it hard to shake off a familiar air of mutual frustration.

For a start, part of Mr Obama’s mind will surely be elsewhere, on the wrangling in Washington over the budget and on the events in the Arab world and Japan. It must once have seemed a good idea to spend a weekend in Rio de Janeiro, watching a song-and-dance show in a favela. But to his domestic opponents it may not appear so.

For many South Americans, the United States is no longer the only game in town (if it ever was). Trade with China is booming. Many South American countries feel increasingly confident that they can make their own mark in the world. That is especially true of Brazil, the most important leg of Mr Obama’s trip.

Relations between the two countries have long been beset by minor niggles. But last year saw a big falling-out over policy towards Iran. Brazil, along with Turkey, voted against the UN resolution that tightened sanctions against Iran’s nuclear programme. Luiz Inácio Lula da Silva, Brazil’s then president, had earlier tried to broker a deal with Iran.

Brazil’s new president, Dilma Rousseff, is a protégée of Lula. But American diplomats are heartened by signs that she wants a fresh start. She has distanced herself from Iran, saying that she disagreed with Brazil’s previous abstention on votes condemning the country’s human-rights record. In a cabinet with many holdovers from Lula’s day, one change stands out: Celso Amorim, who was closely associated with the Iranian adventure, has been replaced as foreign minister by Antonio Patriota, a former ambassador to the United States who is married to an American.

Mr Obama and Ms Rousseff have potentially important business to do. They will sign agreements on scientific co-operation and the cross-recognition of patents. They will also talk of weightier matters. Mr Obama will want to push business opportunities for American firms; the United States has a rising trade surplus with Brazil and the White House is selling the visit as part of its efforts to revive the economy. Although Ms Rousseff has postponed a $6 billion order for fighter jets, Mr Obama will press the merits of Boeing F-18s (rather than France’s Rafale). The Brazilians want technology transferred in the eventual deal; they also want to sell to the Americans their own military-transport aircraft.

The Americans would like Brazil’s backing for their calls for China to revalue the yuan, though Brazil’s policymakers also blame the Federal Reserve’s loose monetary policy for the overvaluation of the real. Brazil wants the United States to end its subsidy to its inefficient corn-ethanol producers. That would open the market for Brazil’s sugar ethanol.

Brazil craves American support for its claim to a permanent seat on the UN Security Council. In November Mr Obama gave explicit backing to India’s claim. But the mistrust sown by Lula’s Iranian gambit means that the furthest the administration has gone is to say that it “admires” Brazil’s “growing global leadership” and “aspiration” to the seat, as Hillary Clinton, the secretary of state, put it last month.

Mr Obama’s next stop, in Chile, was to see an agreement on nuclear co-operation. But Chile, subject to earthquakes and tsunamis, is fast reconsidering the idea of nuclear power. Mr Obama’s last stop is El Salvador. Its president, Mauricio Funes, is a moderate, pro-American leftist; and Central America is beset with drug violence.

In Santiago Mr Obama is to give a speech setting out his vision of relations with Latin America. It will not be easy. The issues that matter most south of the border are migration, curbing America’s demand for drugs and export of guns, expanding trade and ending the American embargo against Cuba. On all of these the president is circumscribed by political deadlock in Washington.

The United States still matters in many ways in Latin America. Mr Obama’s own story inspires many in a region where blacks and indigenous people are often disadvantaged. He can be a powerful voice for democracy and human rights. But unless his words are backed up with some substance his appeal may fade.

Source: The Economist