Brazil approves Camargo's purchase of Cimpor

- Brazil's competition regulator on Wednesday approved Brazilian industrial group Camargo Correa's June purchase of a controlling stake in Portuguese cement maker Cimpor, subject to several conditions.
The main requirement set by the regulator, Cade, is that Votorantim, a competitor with Camargo Correa in the Brazilian cement market, sell its stake in Cimpor. Votorantim and Camargo Correa both bought shares in Cimpor in 2010.
With 40 percent of Brazil's cement market, Votorantim is Brazil's largest cement maker. Through their shareholdings in Cimpor, both Camargo Correa and Votorantim increased their share of Brazil's market.
Cade also said Camargo Correa must sell some assets in Brazil's Sao Paulo state, the country's most populous and industrially developed region, and create a technological development program.
Cade reviewed the purchase as two decades of consolidation in Brazil's cement and concrete markets limit competition and keep prices high. The market conditions have created problems for a government seeking to spend hundreds of billions of dollars in road, port, and housing construction and for companies expanding mines, farms, factories and transport infrastructure to supply soaring Asian demand for commodities.
The Cade decision is expected to result in an agreement between Camargo Correa and Votorantim whereby Camargo Correa gets Cimpor assets in Brazil and Votorantim gets Cimpor assets abroad including Spain, Turkey, China and India.
Under the terms of the Cade decision, Votorantim's exit from Cimpor will be carried out either by selling its Cimpor stock back to Lafarge or by a sale to third party, according to Alessandro Octaviani Luis, the Cade board member who wrote the decision.
"We take Votorantim's willingness to negotiate its departure from Cimpor as a symbol of good will to Cade," said Vinicius de Carvalho, Cade's president.
Luis on Wednesday said he recommended rejecting the initial Votorantim purchase of Cimpor on the grounds that it would raise Votorantim's dominance of Brazil's cement market.
While it has less than half of Brazil's total market, in some states, Votorantim's market share is as high as 70 percent, he said.
"In the cement market, Votorantim does not have the means to grow through acquisitions," Luis said.
Votorantim said later in a statement it bought its Cimpor stake to expand internationally, and it was never its intention to remain a partner in the Cimpor with Camargo Correa.
Votorantim bought its shares in Cimpor from France's Lafarge , the world's biggest maker of cement.
Camargo Correa made an offer to buy all the stock in Cimpor that it or Votorantim didn't already own at the end of March, a purchase it completed on June 20.

CNOOC announced today (23) the purchase of Canadian oil company Nexen for 15.1 billion dollars. The CNOOC is the largest state in the oil industry of China. With the acquisition, the company will expand its operations in markets Canadian, British, Mexican and Nigerian.

 

 

According to material fact sent to the Hong Kong stock market, on Monday, the CNOOC will pay $ 27.5 per share of the Canadian company. The amount represents a premium of 61% on the closing price of the shares of Nexen, the last trading day on Friday.

 

"We are considering a higher value of at least 15.1 billion dollars," said the Chinese company said in a statement. The CNOOC will also use its own resources and external financing to pay off the operation.

 

 

Last year, Nexen produced about 207,000 barrels of oil per day. The Canadian company has assets of conventional oil and gas, oil sands and shale gas.

Keppel's Brazilian unit wins $200 mln order

Keppel Corp Ltd said its Brazilian unit had won a contract worth about $200 million and the order is expected to be completed by the second quarter of 2014.

The order is from MODEC and Toyo Offshore Production Systems Pte Ltd (MTOPS), a joint-venture company established in Singapore by Toyo Engineering Corporation and MODEC, Inc., Keppel said in a statement on Wednesday.

"The contract is for the fabrication and integration of topside modules for the floating production storage and offloading vessel (FPSO) Cidade de Mangaratiba MV24 at Keppel FELS Brasil's BrasFELS yard in Angra dos Reis, Rio de Janeiro, Brazil.

Brazil Local Content Policy Inhibits Oil Development

RIO DE JANEIRO - Brazil's government is betting that laws requiring oil companies to purchase goods and services domestically will stimulate the country's struggling industrial sector, but the bet may pay off only half way if it stymies development of massive oil reserves.

Brazil's government has been imposing local content requirements on oil companies since 1999, but the pre-salt offshore oil discoveries of 2007 increased pressure on the local oil services industry.

Production in the newly-found reserves will depend on sophisticated technologies, but Brazilian oil services companies have struggled to meet exploding demand.

Maria das Gracas Foster, president of state-run oil giant Petrobras, has argued that local content requirements aren't responsible for production delays, citing examples of international suppliers who have delivered services only after lengthy delays.

But a study by Booz & Co., prepared for Brazil's National Petroleum Industry Organization, or ONIP, found that Brazilian producers in the oil services industry charge 55% more than their international competitors.

The study found that a heavy tax burden, high borrowing costs and infrastructure bottlenecks explain the gap between Brazilian companies and their foreign competitors.

"In summary," stated the report, "Brazil is in a challenging position--higher costs than emerging countries and lower productivity than developed countries."

Limited to domestic suppliers, Petrobras forecasts no production growth in the next three years despite its 16.4 billion barrels oil-equivalent in proven reserves, causing speculation that the government may relax local content requirements.

Analysts, however, expect local content laws to remain.

"Our sense is that these requirements are fixed and the government is not going to budge," said Ruaraidh Montgomery, an analyst at the Wood Mackenzie consulting group.

The government's challenge is to ensure that inefficient local suppliers don't permanently handicap the country's oil industry.

To economist Adilson Oliveira of the Federal University of Rio de Janeiro, the policy will fail unless the industry can become internationally competitive.

"The worst case scenario is that local content requirements create a privileged, inefficient industry at the expense of Petrobras and Brazil, but that doesn't have to be the case," said Mr. Oliveira. "The government has to stimulate the industry and demand improvements, not protect it. It has to say, 'We want to help you compete with international companies, not protect you from them.'"

In fact, many foreign companies are setting up Brazilian subsidiaries, but by entering Brazil they take on the costs associated with the country.

Wages are rising as skilled labor has proven scarce, adding to problems with infrastructure, taxes, and bureaucracy.

The Brazilian government has taken steps to lower these costs, funding worker training programs and providing 75,000 scholarships over the next ten years for Brazilians to study abroad through the Science Without Borders program.

Meanwhile, historic cuts by the central bank to the country's Selic base interest rate will lower the cost of capital in Brazil.

In addition, a new ONIP program aims to identify bottlenecks in the oil industry supply chain, with the National Development Bank, or BNDES, funding projects to remove them.

But despite efforts to support the industry, it's unlikely Brazilian companies will be able to compete internationally in the near term.

"Established international players already have the technological expertise, so it's hard to see what Brazilian companies can offer in the short term, although over time they may play a role in deepwater operations" said Mr. Montgomery.

Despite the challenges, local content has many supporters in Brazil.

"Local content requirements are necessary to give the industry a start," said Roberto Magalhaes, superintendent of ONIP. "Every country in the world protects its companies in its own way."

For now, the Brazilian government will protect the oil services industry with local content laws, and oil production will most likely continue to suffer.

"They still don't have the capacity needed to supply the production Brazil envisions," said Jamie Webster, a manager at PFC Energy consultants. "They will be set up for some years of disappointments."

New Data Confirms the Continuity of the Carcará Discovery, in the Santos Basin Pre-Salt Region

Petrobras announced in May that new data obtained
from the drilling of well 4-SPS-86B (4-BRSA-971-
SPS), which is testing the prospect known as Carcará,
reinforces the importance of the good-quality oil
discovery in block BM-S-8, located in ultradeep waters
in the Santos Basin pre-salt region.

It has been proven, so far, that there is a continuous
oil column of 171 meters in reservoirs of excellent
quality. New oil samples of approximately 320 API
were collected from reservoirs located at depths of up
to 5,910 meters, also confi rming the continuity of the
discovery that was reported to the market this March by
the Consortium.

Th e well is located 232 km off the coast of São Paulo
state, at a water depth of 2,027 meters. Th e well is
currently being drilled, at a depth of 5,926 meters and
still within the oil zone, to determine the lower limit
of the reservoirs and the total thickness of the zones of
interest.

Th e Consortium will continue with the activities and
investments needed to assess the area in accordance
with the Assessment Plan approved by the Brazilian
National Agency of Petroleum, Natural Gas and
Biofuels (ANP).

Petrobras is the operator of the Consortium (66%), in
partnership with Petrogal Brasil (14%), Barra Energia
do Brasil Petróleo e Gás Ltda. (10%) and Queiroz
Galvão Exploração e Produção S.A. (10%).
From Petrobras News Agency.

Batista May Win Petrobras Deal on Ship Delays: Corporate Brazil

OSX Brasil SA (OSXB3), the shipbuilder controlled by Brazil’s richest man, stands to benefit from a rival’s failure to deliver vessels on time for offshore oil production. So do the company’s plunging shares.

Eike Batista’s OSX is among companies vying to sell oil tankers and other ships to Petroleo Brasileiro SA (PETR4) as Brazil’s state-owned oil company seeks to more than double output of crude by 2020. Until now, OSX has principally supplied Batista’s own production company, OGX Petroleo & Gas Participacoes SA. (OGXP3)
Petrobras, as the oil company is known, in April suspended a 16-tanker contract with Estaleiro Atlantico Sul SA, which delivered its first ship 21 months late and lost its construction technology partner in March. That opens the field for OSX, said Luiz Broad, an analyst at Agora Corretora.
A major vessel contract with Petrobras “would be very positive,” Broad said in a telephone interview from Rio de Janeiro. “It would have immediate effect on the shares.”
OSX shares have dropped 68 percent since their March 22, 2010 initial public offering, compared with a 22 percent decline for the benchmark Bovespa Index. (IBOV) The shares have suffered from the production company’s failure to meet its own forecasts on timetables and levels of oil production.
The OSX shipyard is under construction in Sao Joao da Barra in northern Rio de Janeiro state and will be the biggest in the Americas, according to the company’s business plan. It is scheduled to launch its first domestically built Floating, Production, Storage and Offloading vessel, or FPSO, in 2014. Last year OSX delivered to OGX a vessel of the same type built in South Korea, and two others are under construction in Singapore.

Local Content

Under former President Luiz Inacio Lula da Silva, the Brazilian government created rules that require oil producers to acquire locally made equipment in an attempt to develop industries ranging from shipyards to oil service providers. Batista created OSX in 2009 to profit from the rules while also supplying OGX, his oil company.
OSX, based in Rio de Janeiro, is in talks to become a supplier of drilling rigs and support vessels for Petrobras, Luiz Carneiro said in May, before he moved from being chief executive officer of OSX to the same post at Rio-based OGX. The shipbuilder in March announced a contract to construct 11 oil tankers for London-based Kingfish Trading Ltd.’s Brazilian unit for $732 million.
“Talks continue for the construction of rigs and are advanced,” OSX said in an e-mailed response to questions about possible deals with Petrobras. “Talks also reflect the diverse business opportunities that exist in the Brazilian oil and gas market in which OSX participates: leasing of off-shore production units, shipbuilding and operating services.” OSX has no current contracts with Petrobras, the company said.

American Shipyards

Batista’s shipbuilding arm isn’t the only potential beneficiary of delays at local yards. U.S. shipbuilders Tidewater Inc. (TDW) (TDW) and Hornbeck Offshore Services Inc. (HOS) (HOS) and rig suppliers Transocean Ltd. (RIG) (RIG) and Noble Corp. (NE) (NE) could also step in, according to James West, an analyst at Barclay’s Capital.
“The rig count is ramping up so they need more vessels to support all the expansion,” West said in a June 29 phone interview from New York. “There are more and more vessels heading into Brazil every year. There’s a lot of competition in Brazil with local providers, and OSX will obviously be one of those.”
Petrobras intends to take its total vessel count to 578 in 2020 from 280 in 2010, according to West.
As for EAS, the tanker company whose contract was suspended, Petrobras fined it for the delays and gave it until Aug. 30 to find a new partner.

New Partner

South Korea’s Samsung Heavy Industries Co. (010140) quit the EAS partnership in March. While EAS has informed Petrobras’s transportation unit that it has signed an agreement with a new technological partner from Japan, the shipbuilder must comply with further conditions before the suspension is lifted, Transpetro, the shipping unit, said in an e-mailed response to questions.
EAS’s new technology partner is Tokyo-based IHI Marine United Inc., the shipbuilder’s external press office said in an e-mailed statement. The press office referred questions on the Transpetro contract to Transpetro.
The Petrobras unit plans to acquire 49 new tankers by 2016 as the parent plans to boost output to about 5.7 million barrels a day in 2020 from 2.4 billion in 2011. The company, Latin America’s largest by market value and producer of 93 percent of Brazil’s oil in May, seeks to increase output in Brazil to about 4.9 billion barrels from the current 2.02 billion as it taps so- called pre-salt reserves.

Salt Layer

Trapped under a layer of salt beneath the Atlantic seabed as far as 300 kilometers from the Rio de Janeiro coastline, the at least 50 billion barrels of pre-salt deposits discovered in 2007 are the biggest discovery in the Americas since Mexico’s Cantarell field was found in 1976. Spain’s Repsol SA (REP), Portugal’s Galp Energia SGPS SA (GALP) and the U.K.’s BG Group Plc (BG/) also have stakes in pre-salt fields off Brazil.

“OSX’s original business plan, and what the markets take into account, is that they would only supply OGX,” said Jose Luiz Garcia, a portfolio manager at Rio de Janeiro-based investment fund Mercatto Gestao de Recursos. “Any orders it gets from others parties will be positive for OSX. Given the share price, I don’t think the market is considering that possibility.”

ABB Wins $80 Million Order from Samsung Heavy Industries

Energy-efficient, reliable electrical systems to be supplied for five drill ships and two liquefied natural gas carriers to be built by Samsung Heavy Industries
ABB, the leading power and automation technology group, recently won an order worth $80 million from Samsung Heavy Industries to supply energy efficient drives, motors and electrical power systems for five drilling vessels and two liquefied natural gas (LNG) carriers to be built at Samsung’s shipyard in Korea. The vessels will be used to extract, process and transport oil and gas. The order was booked in the second quarter of 2012.
Samsung Heavy Industries, a branch of the giant South-Korean holding, focuses its shipyard business on a wide range of large vessel types, including LNG carriers, drill ships and semi-submersible drilling rigs.
Samsung is building five drill ships (three for Seadrill Ltd. in Norway, one for Pacific Drilling S.A in Brazil and one for Ensco Plc in the UK) and two LNG carrier vessels for Golar LNG Ltd in the UK. The vessels will be used for  oil and gas exploration and the transportation of liquefied natural gas. ABB’s delivery will help the ships maximize their energy efficiency, as well as provide a reliable power supply to improve the use of onboard equipment.

“This project underscores ABB’s excellent reputation for delivering comprehensive, reliable solutions that help our marine customers operate at the highest levels of efficiency,” said Veli-Matti Reinikkala, head of ABB’s Process Automation division. “ Our vast oil and gas industry expertise and resources help us to address the unique process requirements and operational challenges of offshore and at sea operations.”
ABB will deliver the complete electrical system for the seven vessels, including power generation and distribution equipment and systems, variable frequency drives and motors to power main propulsion systems and thrusters, as well as drives to power the topside drilling equipment.
The project will be commissioned between 2014 and 2015.
Further development of technologies to facilitate oil and gas exploration, extraction and transport from deep sea and other new sources represents a key global megatrend that is an important focus area for ABB’s long term growth. This project leverages the company’s deep understanding of this industry, and its marine application expertise.

Braskem and Grace form partnership to develop green chemicals

Braskem, the leading petrochemical company in the Americas and the world's leading biopolymer producer, and the U.S. company W.R. Grace & Co., have formed a partnership to develop process technologies and catalyst systems to obtain green chemicals.

The agreement aims to develop processes to convert renewably sourced feedstocks into value-added products.



The use of more sustainable feedstock is already a growing trend in the global chemical industry. The technology under development by both companies is based on carbon sources from renewable agricultural processes that contribute to lower carbon emissions than traditional feedstocks.

'Braskem believes innovation is fundamental to consolidating its global leadership in biopolymers by expanding its portfolio of products made from renewably sourced feedstocks. The partnership with Grace will help us reach our target faster and more effectively,' said Marcelo Nunes, director of Renewable Chemicals at Braskem.



W.R. Grace is recognized worldwide for its innovative catalyst technologies and its leading position in the petroleum refining and polyolefin market segments. 'We are pleased to have the opportunity to work in cooperation with the world leader in green plastics,' said George Young, Vice President of New Businesses Development at Grace.



Since September 2010, Braskem has produced on an industrial scale polyethylene made from sugarcane ethanol, a 100% renewable material. Braskem's green plastic is a milestone in global innovation, making Brazil the leading producer of biopolymers on the planet. Identified by the 'I'm greenTM' seal, this Brazilian green polyethylene is present in a variety of products in Brazil and around the worl