EIG may bid for more of Brazilian Batista's troubled EBX group

EIG Global Energy Partners LLC is interested in buying more assets from troubled Brazilian tycoon Eike Batista, a person familiar with the U.S. investment company's plans said days after it closed a $544 million deal that gives it control of a major new port.

EIG, however, is not actively negotiating with Batista's Rio de Janeiro-based EBX Group, said the person, who declined to specify which assets the $12.8 billion investment-management firm has its eye on.

Forced by debt woes to dismantle an energy, port and mining empire that had been worth $35 billion last year, Batista is seeking partners or buyers for oil company OGX Petróleo e Gás Participações SA, iron ore miner MMX Mineração e Metálicos SA, shipbuilder OSX Brasil SA and coal miner CCX Carvão da Colombia SA.

EIG declined to comment. EBX executives were not immediately available for comment late on Sunday.

EIG, seeking to profit from a Brazilian oil rush, said last week it will buy 1.3 billion reais ($544 million) of new stock in port operator LLX Logística SA to help complete the Port of Açu, a giant complex north of Rio de Janeiro. EIG approached Batista about a possible deal for the port around six to seven weeks ago, the person said.

The port will ease transport bottlenecks for Brazil's commodities producers and provide a home for factories, power plants and oil storage and processing facilities. It will also serve as a base to help develop a giant new offshore oil play known as the Brazilian subsalt.





Last year, EIG also agreed to invest 500 million reais, then worth $280 million, in Sete Brasil, which is building 28 deep-water drilling rigs for Brazil's state-led Petroleo Brasileiro SA, or Petrobras.

EIG got the LLX assets for a fraction of what they could be worth if the Port of Açu realizes its potential. Companies such as U.S.-based General Electric Co, which builds power plants for offshore oil platforms, and France's Technip , a major offshore oil engineering contractor, have agreed to buy land at the port.

EIG expects the Port of Açu will be busy serving Brazil's state-led Petroleo Brasileiro SA, or Petrobras and partners such as Britain's BG Group Plc and Spain's Repsol SA.

The subsalt oil reserves they have discovered, named for their location beneath a layer of salt, runs along Brazil's coast near Rio de Janeiro and may contain 100 billion barrels of oil, according to the Brazilian Petroleum Institute at Rio de Janeiro-State University. That's enough to supply more than 14 years of U.S. needs at current consumption levels.

"The landing point for all of that oil is Açu port," the person said. "It's a crown jewel."

Many expect the region to attract more than $500 billion of investment over the next decade and that Brazil will as much as triple output to more than 6 million barrels a day, helping Brazil surpass the United States as the world's No. 3 oil producer after Saudi Arabia and Russia.

This isn't the first time EIG has been in the spotlight in the wake of a corporate melt-down. In the weeks before Chesapeake Energy CEO Aubrey McClendon was stripped of his chairmanship over his personal financial dealings, he arranged an additional $450 million loan from EIG, a long-time backer of McClendon's and Chesapeake's. In total, EIG since 2010 lent McClendon $1.33 billion.

EIG, which was spun out of the Los Angeles-based bond investor TCW in 2011, has not made any personal loans to Batista, the person said.



When restructuring of EBX ends, Batista will be left with between $1 billion to $2 billion of assets and $1.7 billion of long-term debt, a person who has direct knowledge of EBX plans has told Reuters. His empire once was valued at over $60 billion.

Brazil to Approve 12th Round Natural Gas Concession Auction

Brazil's National Energy Policy Council was expected to approve Tuesday an auction of natural gas concessions scheduled for November, said the director of the country's National Petroleum Agency, or ANP.

The ANP will put up for bid 240 exploration blocks in seven inland basins at the auction, the ANP's Magda Chambriard said. The blocks are focused on natural gas exploration, including so-called non-conventional deposits similar to the shale deposits being tapped in the U.S.

State-run oil company Petroleo Brasileiro (PBR, PETR4.BR), or Petrobras, has been evaluating Brazil's non-conventional natural gas potential since last November, said Jose Formigli, Petrobras's exploration and production director.

Petrobras has been working "heavily" to identify promising areas and ways to reduce drilling costs to make developing such deposits viable, Mr. Formigli said. Some of the areas are very remote, so Petrobras wants to have a good idea about the best way to turn the natural gas into cash, the executive added.

The new Pascuales-Cuenca 210 kilometers pipeline

Ecuador--Four companies, including Sinopec International Petroleum Service Ecuador S.A., the local unit of China state-owned Sinopec, and Brazil's Norberto Odebrecht, have submitted bids for a tender to build a 46,000 barrels per day multipurpose oil pipeline project in Ecuador, state-run company Petroecuador said.

Petroecuador said Consorcio International PPC and ICC Conkor also submitted offers.

The new Pascuales-Cuenca 210 kilometers pipeline will be located in the southern Ecuador. It will run from the port city of Guayaquil to Cuenca. It will supply diesel, gasoline and liquefied petroleum gas to six provinces in Ecuador.

Petroecuador will make the technical and economic evaluation of the proposal public at the end of August.

Petroecuador didn't provide details on the cost or construction timeline.

New pipelay orders for Huisman with major offshore contractors

Huisman has secured new contracts for 10 pipelay systems with various major offshore pipelay contractors. The new contracts include:
Three 550 t Tiltable Lay Systems (TLS) and one 325 t Vertical Lay System (VLS) for Subsea 7.
Two 650 t TLS and two 340 t VLS for Technip-DOF.
One 275 t VLS and one 570 t Multi-lay System for Ceona.

The equipment will be built at the various Huisman production facilities in the Netherlands, Czech Republic, China and Brazil. Delivery of these pipelay systems is scheduled between the end of this year and early 2017.
Orders for Subsea 7 and Technip-DOF

The orders for the 3 x 550 t TLS for Subsea 7 and the 2 x 650 and 2 x 340 t TLS for Technip-DOF are all part of those companies’ contracts with Petrobas.

The three Subsea 7 TLS will all be equipped with a sophisticated Huisman squeeze system to accurately control squeeze loads. Moreover, all tensioners will be retractable, which allows for safe and efficient installation of large subsea infrastructure components such as umbilicals, risers and flowlines.

The vessels for Subsea 7 will be built by IHC, the Netherlands.

Technip-DOF’s order for two TLS includes baskets and 2 x 50 t SMST knuckle boom cranes, which allow for deck handling and deepwater operation.

The vessels for the 2 x 650 t will be built by VARD in Norway and the vessels for the 2 x 340 t will be built by VARD in Brazil.

Delivery of the final pipelay system for these orders is scheduled for early 2017.

An additional contract for Subsea 7 includes a 325 t VLS for its newly built DP3 heavy construction and flexible pipelay vessel, which will be built by Korean shipyard Hyundai Heavy Industries Co. Ltd. Besides the pipelay system, Huisman will also deliver a 600 t AHC subsea crane for this vessel. Delivery is scheduled for 2015.
Orders for Ceona

The orders for Ceona include pipelay systems for the company’s vessels the Polar Onyx and theCeona Amazon.

The latter, a multi-function, dynamically positioned construction vessel, will be built based on a Huisman vessel design. The highly integrated and fully optimised vessel will have exceptional sea keeping characteristics, with a maximised deck area and a weather window with limited vessel dimensions.

This design includes a project area of 4600 m2, which allows for further storage of line pipe and standard flexible installation reels.

The pipelay system consists of an inclinable lay system with a top tension of 570 t and a rigid pipeline firing line system. The vessel can lay rigid pipelines, flexible pipelines and umbilicals, and can install large subsea structures using one or both of her 400 t subsea cranes, also built by Huisman.

The Ceona Amazon will be built by Lloyd Werft, and the Huisman equipment is scheduled for delivery in 2014. The 275 t VLS for the Polar Onyx will be delivered in 2014 as well.

Agito AS opens office in Brazil

Agito AS, a world-leader in providing modeling and simulation of complex dynamic systems, is pleased to announce the opening of Agito Technical Dynamics do Brasil. Brazil is one of the major regions for development of offshore oil & gas production, and this office will meet the increasing demand for dynamic analysis in the region and ensure that our clients in Brazil receive local representation.  

Agito, with more than 15 years of experience, have the resources available to complete modeling and simulation analyses of hydraulic, electrical, and fluid systems. Drawing on resources from our offices in United States, United Kingdom and Norway, Agito provides support at all project levels from initial studies to final testing and verification. Using CAE software that meets the specific needs of the offshore/subsea industry, Agito performs dynamic analyses and optimization of critical functions in complex systems, including detailed reporting. 

The software, SimulationX®, developed by ITI GmbH in Germany, is the trend-setter in physical system simulation. It was the first universal CAE tool with a subsea specific library. The library, developed by Agito and ITI, has ready to use subsea component models such as: umbilicals, subsea control modules, subsea valves, deep-water accumulator, subsea compensators and ROV stabs.  The next step, an electrical subsea library, is in the final stages of development, and will be available for commercial use at the end of this year.

“CAE tools, such as SimulationX®, allow one to test a system virtually before putting it into production. It is an essential supplement which helps engineers design a better product at a lower cost. The simple user interface allows for simulation projects to be performed in-house.  Alternatively Agito’s team of experts can complete your projects.”, as mentioned by Carlos Witte, Vice President of Agito Technical Dynamics do Brasil.

Wind Power - Alstom inaugurates its first wind tower factory in Latin America

Installed in Canoas in Rio Grande do Sul State, South part of Brazil, the site will have the capacity to produce 120 steel towers per year, enough to supply approximately 350 MW of electricity. This factory will supply the southern region of Latin America, a market currently experiencing strong growth. The ceremony was attended by Tarso Genro, Governor of Rio Grande do Sul State, and other local authorities.

“The geographical position of the plant allows us to be close to our customers and enables important interaction with other countries such as Argentina, Chile and Uruguay. We have a long and established history in the wind markets of Latin America, and we continue to invest in the region to meet its growing power needs.” explained Marcos Costa, Country President of Alstom Brazil.

It is Alstom’s second wind manufacturing unit Latin America, following the commissioning of its first wind nacelle plant in Camaçari, State of Bahia, in November 2011. The Camaçari unit has the capacity to manufacture 600 MW of wind turbines per year.

Spanning approximately 11,000 m², beside Alstom’s Grid power transformers and shunt reactors unit(1), the new plant will employ 90 people and could generate an additional 250 indirect jobs in the region. The Canoas plant will produce towers dedicated to the Corredor do Senandes complex, the first wind project of Odebrecht Energia which will have 108 MW of installed capacity.

A few months ago, Alstom signed a partnership with Renova Energia. The agreement – the biggest within the global onshore wind market – could potentially generate around one billion euros in orders for Alstom, through the installation of at least 1.2 GW in projects.  The companies have already signed a contract for 513 MW as part of the frame agreement.

Operations in the Pre-Salt - Petrobras

The discoveries made in the Pre-Salt raise us to a new level of reserves and oil production, ranking us in a prominent position among the major energy companies.

With the experience they have acquired developing fields nestled in deep waters, our technicians are now ready to develop the accumulations discovered in the pre-salt.

To this end, they are already adapting the technology and the logistics the company developed through the years. The goal is to achieve, by 2017, a daily production in excess of a million barrels of oil in the Pre-Salt areas we operate.

1. What is the pre-salt?

The expression "pre-salt" makes reference to an aggregation of rocks located offshore in a large portion of the Brazilian coast and with potential to generate and accumulate oil. It was called pre-salt because it forms a rock interval that ranges under an extensive layer of salt which, in certain areas of the coast, can be as much as 2,000 meters thick. The "pre" expression is used because, through time, these rocks were deposited before the salt layer. The total depth of these rocks, i.e., the distance between the surface of the sea and the oil reservoirs under the salt layer, can be as much as 7,000 meters.

Petrobras recently made the biggest oil discoveries in Brazil in the pre-salt layer located between the states of Santa Catarina and Espírito Santo, where major volumes of light oil were found. The oil that has already been found in the pre-salt layer in the Santos Basin, for example, has a specific gravity of 28.5o API, low acidity and low sulfur contents. These are the hallmarks of a high-quality oil with a higher market value.

2. What is the estimated volume of oil found in the pre-salt accumulations discovered thus far?

The first results indicate very large volumes. Just to have an idea, the Tupi accumulation alone, located in the Santos Basin, has recoverable volumes estimated at 5 to 8 billion barrels of oil equivalent (oil plus gas). Meanwhile, the Guará well, also in the Santos Basin, holds 1.1 to 2 billion barrels of light oil and natural gas, at a specific gravity of approximately 30o API.

3. Are the recent discoveries made in the pre-salt economically feasible?

Based on the results obtained from the wells that have been drilled and tested thus far, there is no doubt regarding the technical and economic feasibility of the commercial development of the accumulations that were found. The technical studies that have already been carried out for the development of the pre-salt, associated to the mobilization of specialized service and equipment resources and logistics, allow us to guarantee this venture will be successful. A few important stages in this process have already been overcome: in May 2009, Petrobras kicked-off the extended well test for the Tupi area, capable of processing some 30 barrels of oil per day. A month later, the Capuava Refinery (Recap), in São Paulo, processed the first volume of oil lifted from the Santos Basin's pre-salt layer. It is a historical milestone for the global oil industry.

4. How did this history of overcoming challenges begin?

In 2004, a few wells were drilled to look for oil in the Santos Basin. Drilling was done because known sandy rocks were found there, deposited in deep waters above the salt level. If oil were discovered, the idea was to drill deeper until reaching the pre-salt, where technicians believed major oil reservoirs would be found.

In 2006, when drilling had already reached a depth of 7,600 meters from the water line, a giant gas accumulation and reservoirs of oil condensate, a component of light oil, were found. That same year, in another drilling done in the Santos Basin, the Company and its partners made another discovery that would change the course of exploitation in Brazil for good. The great news came at a depth of a little more than 5,000 meters from the water line: signs of oil were found under the salt layer in the well currently known as Tupi. This success lead to the drilling of seven more wells, and oil was found in all of them. The investment paid off.

5. What changes for Petrobras with these results?

These discoveries will catapult the company, in the upcoming years, to a new oil reserve and production level, ranking it among the major operators. With the experience they have acquired developing fields nestled in deep Campos Basin waters, Petrobras' technicians are prepared to develop the accumulations discovered in the pre-salt. To this end, they are already adapting the technology and the logistics the company developed through the years.

6. Does the industry have installed capacity to meet these demands?

This is another major challenge: the good and service industry's installed capacity cannot meet the foreseen demands yet. On account of this, Petrobras will resort to a few competitive advantages that have already been identified to drive the development of the supply chain. Thanks to its leveraging capacity, due to the volume of purchases, the company can sign long-term agreements with its suppliers. This is quite a guarantee for a market that is currently in expansion. Additionally, it can anticipate agreements, provide support to strategic suppliers, raise funds, and attract new partners. All of this based on an aggressive tendering program designed to face the production challenges of the near future.

7. What are Petrobras' trumps to operate in the pre-salt area?

Firstly, the undeniable, world-renowned competence of its technical and managerial staff; the experience accumulated in the development of the reservoirs found in deep and ultra-deep waters in the other Brazilian basins; its logistics base installed in Brazil; its capability to articulate with good and service suppliers and with the academic area contributing with knowledge; and the great economic and technological interest this challenge arouses in the country's scientific and industrial community.