Smith unit acquires Petrobras contract

A unit of Smith International Inc. has taken over a three-year contract with Petróleo Brasileiro, Brazil’s state-owned energy giant.

Houston-based Smith (NYSE: SII) will operate the Petrobras contract through its PathFinder Energy Services unit at its new facility in Macae, Brazil.

The deal represents possible revenue of between $80 million and $100 million. PathFinder will also acquire all related directional drilling assets from San Antonio International do Brasil.

San Antonio International had previously been the lead contractor through which PathFinder had taken on contracts in that country, Smith officials said in a statement.

Technip Bags Front End Engineering Design Contract From Polimerica

Technip SA said it was awarded a reimbursable contract by Polimerica to perform the front end engineering design or FEED for a new ethylene plant. The company added that the plant, which will have a capacity of 1.3 million ton/year, will be a part of a new petrochemical complex to be built in Jose, Venezuela.

The company estimated an overall investment for the complex to be about US$3.2 billion.

Petrobras announces new partnership in Turkey

Brazilian mixed-capital oil giant Petrobras; the Turkish oil company Turkish Petroleum Corporation (TPAO); and ExxonMobil signed on January (11) in Rio de Janeiro, a partnership for the exploration of Block 3922 (Sinop), located in deep waters in the Black Sea, in Turkey. According to the contract, ExxonMobil Exploration and Production Turkey B.V. owns a 25% stake in the block. Petrobras's interest in the project is 25%, and TPAO owns the remaining 50%.

According to the communique by the Brazilian oil company, the drilling platform to be used in this project - the Leiv Eiriksson drilling unit - arrived in Brazil in December 31. Drilling activities are expected to start in the first quarter of 2010 in the Sinop-1 well, located 145 kilometers away from the city of Sinop.

The document will provide for TPAO, Petrobras and ExxonMobil to grow jointly in exploration activities in the Black Sea and take advantage of the synergy existing among these companies,' said Fernando Cunha, Petrobras executive manager for the Americas, Africa and Eurasia.
(Source: Investnews; Sao Paulo)

Brazil's Petrobras To Start Work On Maranhao Refinery Friday

RIO DE JANEIRO (Dow Jones)--Brazilian state-run energy giant Petroleo Brasileiro (PBR), or Petrobras, will lay the cornerstone for its "Premium 1" refinery in northern Brazil on Friday.

A ceremony that will include President Luiz Inacio Lula da Silva will mark the start of construction at Bacabeira in the northern state of Maranhao, Petrobras said. Work on the refinery is expected to be completed in September 2013.

The refinery is one of two so-called premium fuels plants that will process oil from recently discovered offshore deposits. The "Premium 1" refinery will have installed capacity to process 300,000 barrels a day in its initial phase.

The refinery will produce high-quality diesel fuel, aviation fuel, naphtha, liquified petroleum gas, bunker fuel and coke.

A second phase at the refinery will double capacity to 600,000 barrels a day by September, 2015.

The Maranhao refinery will be complemented by a second 300,000-barrel-a-day refinery in Ceara state.

Together, the two refineries are expected to cost Petrobras $20 billion.

Petrobras plans to build a total of four new refineries as part of its effort to boost capacity to 3.6 million barrels a day. The company currently processes about 1.9 million barrels daily.

Petrobras is also conducting site work for the planned Abreu e Lima refinery in Pernambuco state, which will include Venezuela state oil company Petroleos de Venezuela, or PdVSA, as a partner. The Comperj petrochemicals complex in Rio de Janeiro is also under construction, although the focus of the refinery is now expected to shift toward fuels processing rather than petrochemicals.

Petrobras, Odebrecht Buy Control of Quattor,

Brazil’s Petroleo Brasileiro SA and Odebrecht SA agreed to pay 872 million reais ($504 million) for an indirect controlling stake in Quattor Petroquimica SA, Valor Economico reported, without saying where it got the information.

Petrobras, as the state-controlled oil company is known, and Odebrecht bought a controlling stake in Vila Velha Participacoes, which owns 60 percent of voting shares in Quattor’s parent Uniao de Industrias Petroquimicas SA, or Unipar, the Sao Paulo-based newspaper said.

Odebrecht and Petrobras are the controlling shareholders of petrochemicals maker Braskem SA.

Negotiations with Quattor shareholders haven’t been concluded, Petrobras said in an e-mailed statement to Bloomberg News, declining to comment further.

Spokeswomen for Odebrecht and Unipar, who asked not to be named because of company policy, said they couldn’t comment. Nelson Letaif, a Sao Paulo-based spokesman for Braskem, also declined to comment.

Giant Brazil Petrochem Fusion Faces Obstacles

RIO DE JANEIRO (Dow Jones)--A much-ballyhooed tie-up between rival petrochemical companies Braskem SA (BAK, BRKM5.BR) and Quattor Petroquimica (SZPQ4.BR) is facing increased obstacles, several Brazilian news outlets reported Thursday.

According to the reports, the consolidation of Brazil's petrochemicals industry into a single giant entity under the Braskem banner was cast in doubt amid a dispute between state-run energy giant Petrobras (PBR) and local industrial conglomerate Odebrecht over control of the new company.

Petrobras has demanded that a company executive be named either chairman or chief executive of the combined Braskem-Quattor, as well as management positions at several key units, local business daily Valor Economico reported. Odebrecht controls Braskem with a 62.3% stake, while Petrobras holds a minority 31% share.

In addition, a member of the Geyer family--which has a 60% stake in Quattor controlling shareholder Unipar (UNIP6.BR)--is vowing to fight the deal in court. Petrobras holds the remaining 40% of Quattor.

Braskem, Petrobras and Quattor have declined to comment further on talks between the companies, referring instead to previous filings with stock regulators that negotiations on a "strategic alliance" have been underway since August 2009.

Quattor is at the center of a second wave of consolidation in Brazil's petrochemicals sector. Braskem and Petrobras first announced interest in Quattor last August, saying the companies had engaged in talks about a strategic alliance. India's Reliance Industries Ltd. (500325.BY) was also rumored to be in talks with Quattor about a possible acquisition.

Braskem and Quattor would have combined revenue of about $30 billion Brazilian reals ($17.4 billion).

Shares of the companies involved were all lower in trading Thursday on the Sao Paulo Stock Exchange, or Bovespa, amid a broader sell-off.

Petrobras shares were down 0.9% at 37.15 Brazilian reals ($21.31) as of 1500 GMT. Braskem shares, meanwhile, slipped 2.1% to BRL14.15 and Unipar shares were off 1.7% at BRL1.19.

-By Jeff Fick, Dow Jones Newswires

Brazil Ends 2009 Largely Unscathed By Global Economic Crisis

January 06, 2010

While most economies were battered by the global economic crisis last year, Brazil emerged largely unscathed and, by some measures, set record highs.

Thanks to the resilience of its domestic market and steady foreign demand for its commodities, especially from China, Latin America's biggest economy shrank only around 0.2% last year, compared to an estimated 4% contraction in the European Union and 2.5% shrinkage in the U.S.

Market and government forecasts now see Brazil's 2010 gross domestic product growth returning to pre-crisis levels of 5% to 6.5%.

Brazil generated some impressive economic feats last year despite the financial crisis that began to rock markets in late 2008.

The stock market gained 83% last year, its best year since 2003, sustained in part by a record net inflow of 20.45 billion Brazilian reals ($11.8 billion) from foreign portfolio investors, according to a Bovespa stock exchange statement Tuesday.

Brazil's foreign reserves hit record levels, rising to $239 billion, or 15% more than in 2008. Reserves swelled thanks to daily government dollar spot market purchases, undertaken in a bid to stem the appreciation of the Brazilian real, which gained 34% against the dollar.

The real's appreciation was another--but mostly unwelcome--record in the currency's 16-year existence.

The center-left administration of President Luiz Inacio Lula da Silva proved sure-footed during the dark days of the global economic downturn. Government measures maintained employment and domestic demand, while inflation was comfortably kept in check below its 4.5% annual target.

Thanks to tax cuts, improved credit conditions amid an aggressive easing in monetary policy and the stability of spending power for middle- and low-income households, demand for consumer durables continued through the worst of the crisis.

Brazil's key automotive industry and its lengthy production chain, a major national employer, was the main beneficiary of the tax cuts and the easy credit policy. Domestic motor vehicle sales reached a record 3.1 million units last year, an 11% rise from the year before.

The volume of consumer credit expanded around 30% last year, with some 70% of vehicle sales financed.

The government-owned Brazilian Development Bank, or BNDES, helped boost credit, writing a record in low-cost loans of BRL137 billion, 49% more than in 2008.

The Selic base rate, meanwhile, reached an historic low of 8.75% last year.

Brazil is well-positioned to take advantage of the much hoped for global economic recovery. Brazilian stocks, for instance, are expected to make further gains in 2010, but much less than in 2009.

Alvaro Bandeira, director of Brazil's largest brokerage Agora Senior is predicting a 20% gain for the Ibovespa index in 2010 based on expectations of solid growth.

That's well below last year's return but still very impressive for an economy with almost pariah status two decades ago.

By: John Kolodziejski